Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canadian Competition Tribunal rejects Competition Commissioner’s challenge to Visa and MasterCard’s merchant rules, (Jul 24, 2013)

By Tobias J. Gillett, J.D., LL.M.

The Canadian Competition Tribunal issued a decision yesterday dismissing an application filed by the Commissioner of Competition challenging certain rules Visa and MasterCard impose on merchants who accept their credit cards.

The Tribunal concluded that Section 76 of the Competition Act required a resale, and that the Commissioner did not establish that customers of Visa and MasterCard resold their products, according to a summary of the decision in Commissioner of Competition v. Visa Canada Corp. and MasterCard Int’l Inc. (CT-2010-10) released by the Tribunal.

Moreover, the Tribunal found that it would not have issued an order even if it decided that issue differently. Assuming that Visa and MasterCard had engaged in price maintenance by implementing their “no-surcharge rule,” a rule prohibiting merchants from applying a surcharge to customers paying with credit cards, the Tribunal found that Visa and MasterCard would have had an adverse effect on competition. However, the Tribunal concluded that the appropriate response to the Commissioner’s concerns would have been a regulatory framework rather than an order. The Tribunal noted that experiences in other jurisdictions demonstrated consumers would raise concerns regarding surcharges that would lead to legislative intervention.

However, the Tribunal found that the Commissioner had advanced a case that should have been brought, and awarded no costs.

"I am disappointed that the Tribunal has dismissed the Bureau's application," said John Pecman, Commissioner of Competition, in a statement released by the Competition Bureau. "At the same time, the decision recognized that this case is one that should have been brought before the Tribunal and found that Visa and MasterCard's conduct had an adverse effect on competition. We will be reviewing the decision closely to determine our next steps."

"Without changes to Visa and MasterCard's rules, merchants will continue to pay excessively high card acceptance fees, and these fees will continue to be passed along to consumers in the form of higher prices for goods and services," added Alison Tait, Deputy Commissioner of Competition, Civil Matters Branch.

The Tribunal’s reasons behind its decision remain confidential at this time. The Tribunal will issue a public version of the decision once a decision has been reached regarding what information must stay confidential.

MasterCard response. MasterCard issued a press release applauding the Tribunal’s decision, and calling it “good news” for Canadian credit card users and merchants.

“We want our cardholders to know that wherever they see the MasterCard emblem they can use any MasterCard confidently without extra charges tacked on and without discrimination,” said Betty K. DeVita, President, MasterCard Canada. ““We only succeed when retailers and consumers succeed. The data proves that retailers that accept MasterCard see an increase in sales and reduce their costs of handling cash and record keeping. We are pleased that we will continue to be able to protect consumers from unfair or unexpected fees at checkout.”

Companies: Visa Canada Corp.; MasterCard International Inc.

News: Antitrust