Canada: Canada’s Competition Tribunal Rejects Commissioner’s Challenge To Visa And Mastercard Rules

On July 23, 2013, the Competition Tribunal announced the result in its long-awaited decision in the Commissioner of Competition's case against Visa Canada Corporation and MasterCard International Incorporated.1 In its first decision interpreting the new civil price maintenance provision, the tribunal concluded that the commissioner's theory of the case was not supported by the legislative history of the provision or other decisions. Because the credit card services supplied by Visa and MasterCard to their customers were not "resold," there could be no resale price maintenance contrary to section 76 of the Competition Act.

The tribunal also concluded that in the event it was incorrect in its legal analysis and the parties had engaged in price maintenance, it would not have issued the order sought by the commissioner. Rather, it concluded that a regulatory framework to address consumer concerns over credit card fees was the proper solution. In a statement, Commissioner John Pecman expressed disappointment with the decision and noted the Competition Bureau is reviewing it to determine next steps.


Then-Commissioner Melanie Aitken brought this case as part of her commitment to use the tools available to the Competition Bureau following significant amendments to the Competition Act passed in March 2009. Following a formal inquiry launched in April 2009, the commissioner commenced an application before the tribunal in December 2010, alleging Visa and MasterCard (the Respondents) were engaged in price maintenance contrary to section 76 of the Competition Act. The commissioner asked the tribunal to order the Respondents not to implement, enforce, or continue any agreement that would influence upward, or discourage the reduction of, the prices paid by merchants for credit card network services in Canada.

The arguments

The commissioner argued that the agreements between the credit card companies and the acquiring financial institutions work to influence upward or discourage the reduction of prices charged by merchants because merchants would have paid lower prices without the contractual restraints placed on them by the financial institutions which issue credit cards and agree to pay the merchants for the credit card transaction. The commissioner argued that the Respondents supply a credit card network service indirectly to merchants through financial institutions, and the Respondents indirectly placed obligations on the merchants that had the effect of price maintenance. Finally, the commissioner argued that there was an adverse effect on competition because of the restraints placed on merchants. Through contractual agreements, merchants are not able to decline premium cards that carry higher transaction fees for merchants or impose a surcharge on customers that wish to pay by credit card.

The Respondents argued that the commissioner mischaracterized the nature and purpose of their operating rules, which they argued are intended to ensure merchants cannot subject cardholders to unexpected surcharges or decline their cards. The Respondents argued, among other things, that there is no resale of the products they supply.

The tribunal's decision

Section 76 of the Competition Act empowers the tribunal to make an order against a person who "extends credit by way of credit cards or is otherwise engaged in a business that relates to credit cards" when the tribunal finds that such person has directly or indirectly "by agreement, threat, promise or other like means...influenced upward or...discouraged the reduction of, the price at which the person's customer or any other person to whom the product comes for resale supplies or offers to supply or advertise a product within Canada." Prior to issuing an order, the tribunal must also be satisfied the conduct has had, is having, or is likely to have an adverse effect on competition.

The tribunal ruled that "section 76 of the Competition Act requires a resale" and "the commissioner...had not established that the Respondents' customers resell the Respondents' products." Traditionally, resale price maintenance cases have focused on situations where a supplier of a product requires (or threatens them if they decline to do so) the retailers or wholesalers that resell its products to sell them at a certain (generally higher) price or risk some consequence. The tribunal confirmed in this case that there must be a direct resale of what is being supplied by the party targeted by the commissioner.

The tribunal announced that in the event its legal analysis of section 76's scope was incorrect, its reasons will include a detailed alternative analysis. The tribunal concluded that, when it assumed the Respondents had engaged in price maintenance as alleged by the commissioner, the rule imposed by the Respondents that prohibited merchants from imposing a surcharge on consumers who paid by credit card did in fact result in an adverse effect on competition.

However, the tribunal noted it would have nonetheless declined to issue the order sought by the commissioner that would have prevented the enforcement of the Respondents' various merchant restrictions. Rather, the tribunal noted that the "proper solution to the concerns raised by the commissioner is a regulatory framework." Pointing to experiences in other jurisdictions, the tribunal noted that consumer complaints would eventually, and likely "sooner than later," lead to regulatory intervention.


This decision is the second consecutive decision in which the tribunal has adopted a narrow interpretation of the Competition Act in rejecting a case brought by the commissioner.

In April 2013 the tribunal rejected the commissioner's abuse of dominance case against the Toronto Real Estate Board, holding that the conduct did not fall within the scope of section 79 of the Competition Act.2 The commissioner is appealing that decision.

The commissioner's case against the credit card companies was widely seen as a novel application of section 76, given the complex relationships between the credit card companies, the financial institutions that issue the cards, the merchant acquirers who supply the credit card services directly to the merchants, and the merchants. The commissioner has 30 days to file an appeal, and the tribunal's clear signal that a regulatory fix is more appropriate than a judicial order may influence that decision.


1.  The Commissioner of Competition v. Visa Canada Corporation and MasterCard International Incorporated et al, CT 2010-010.  A summary of the decision was issued pending release of the full reasons.

2.  The Commissioner of Competition v. The Toronto Real Estate Board, 2013 Comp. Trib. 9 (CT-2011-003).

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