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Commissioner Will Not Appeal Competition Tribunal’s Decision in Visa/MasterCard

The Commissioner of Competition (the “Commissioner”) today announced that he would not appeal the Competition Tribunal’s (the “Tribunal”) decision to dismiss the Commissioner’s application against Visa and MasterCard.

In a statement, the Commissioner noted that “the Tribunal found that Visa and MasterCard’s conduct is influencing the price of credit card services in Canada upwards and having an adverse effect on competition. At the same time, the Tribunal felt that regulation of the industry would provide a more appropriate solution than any remedy that it could provide. The Competition Bureau will continue to pursue ways in which it can resolve the issue of anti-competitive credit card rules imposed by Visa and MasterCard on merchants in Canada.”

The Commissioner’s approach is consistent with the position taken by the Minister of Finance (“the Minister”) shortly after the Tribunal’s decision was released in July 2013. At the time, he had emphasized the importance of clear rules and information about payment methods for the benefit of merchants and consumers. The Minister also said he would call a meeting of “the Government’s FinPay Committee – a consultative committee on payments issues that includes representatives from the credit card industry, small business, retailers, consumers, and many more – to discuss this matter and next steps”.

Background and Tribunal’s Decision

In 2010, the Commissioner filed an application alleging that credit card acceptance rules negatively affect competition by requiring merchants to honour all cards bearing the card network’s brand and by prohibiting merchants from imposing surcharges when certain cards are used. The Commissioner had objected that the rules prevent merchants from (i) encouraging customers to use lower-cost forms of payment (for example debit card or cash payment); (ii) declining to accept “higher-fee” premium cards that cost more for the merchant to accept; and (iii) applying surcharges to transactions where customers use “higher-fee” cards – with the result being an adverse effect on competition.

In its decision, the Tribunal found that section 76 of the Competition Act requires a resale and that the Commissioner had not established that Visa and MasterCard customers resell their products. The Tribunal further held that the Commissioner’s proposed interpretation of section 76 was not supported by the legislative history of the provision or other decisions.

For a copy of our earlier discussion of this case, please click here.