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Competition Tribunal Allows Visa and MasterCard to Enforce Their Merchant Customer Rules

July-24-2013

Lawyer Richard Annan
Area Competition, Antitrust and Foreign Investment

Summary

On July 23, 2013, the Competition Tribunal (“Tribunal”) dismissed the application of the Commissioner of Competition (“Commissioner”) requesting an order prohibiting Visa and MasterCard from enforcing some of their merchant customer rules.  Among other things, the rules in question prohibit merchants from imposing a surcharge when a consumer uses a premium credit card for payment.  When used by their customers, premium credit cards result in higher credit card acceptance fees for merchants.  The Commissioner argued that such fees are passed on to all customers in the form of higher prices for goods and services.

The Tribunal dismissed the application because it was brought under the price maintenance provision of the Competition Act (“Act”) and the Commissioner had not established that the merchant customers resold the Visa and MasterCard products as required under that provision to constitute a reviewable practice.

The Tribunal noted that, even if the Commissioner’s application met the requirements of the price maintenance provision, it would have declined to issue the order requested because the competition issues raised by the Commissioner are best addressed by regulation.  The Tribunal made no award of costs, noting that, notwithstanding it was unsuccessful, the case was one that was appropriately advanced.

This case highlights the fact that, even if conduct meets the requirements of a reviewable practice under the Act, including having the requisite anti-competitive effect, the Tribunal may exercise its discretion not to issue an order.  To date, the Tribunal has issued only a summary of its decision.  Once its reasons are issued, we should have further guidance on the application of the price maintenance provision.

For further information on these rules, please contact any member of our Competition Group.