On July 23, 2013, the Competition Tribunal dismissed the
Commissioner of Competition's resale price maintenance (RPM)
case against Visa Canada Corporation and MasterCard
International Incorporated (CT-2010-010). In a
summary of its decision (which will be made available in full once
confidential information is identified and redacted), the Tribunal
said that section 76 of the Competition
Act requires a resale and that, in this case, the
Commissioner of Competition had not established that Visa and
MasterCard's customers resell Visa and MasterCard's
products. Furthermore, the Tribunal held that the
Commissioner's proposed interpretation of section 76 of the Act
was not supported by the legislative history of the provision or
In the event that the Tribunal's interpretation of section
76 of the Act was incorrect, the Tribunal conducted an
alternative analysis that assumed that Visa and MasterCard engaged
in RPM, as defined by the Commissioner, by implementing the
no-surcharge rule. The no-surcharge rule prohibits merchants from
applying a surcharge for customers paying with credit cards. Under
these circumstances, the Tribunal found there had been an adverse
effect on competition. However, even under this alternative
analysis, the Tribunal said that it would not have issued an order
and stated that a regulatory, rather than competition, response
would be better suited to address the concerns raised by the
Commissioner. The Tribunal further noted that the experience in
other jurisdictions showed consumer concerns related to surcharging
would arise and regulatory intervention would then take place.
As discussed in an earlier post, in December 2010, the
Competition Bureau filed an application with the Tribunal against
Visa and MasterCard under section 76 of the Act. Section 76 is a
civil provision that enables the Tribunal to prohibit
anti-competitive resale price maintenance. The Bureau alleged that
Visa and MasterCard lessened competition between and among credit
card networks by requiring banks to impose restrictive rules on
merchants that prevent merchants from encouraging the use of cards
with lower transaction fees. The Bureau argued that these rules
hurt consumers because merchants recover the higher fees by
increasing prices generally, and consumers using low-cost cards or
cash effectively subsidize consumers who use high-cost cards. Visa
and MasterCard disputed these allegations and argued that the rules
were in compliance with the Act and that they help ensure consumer
choice is protected at checkout.
In response to the Tribunal's decision, the Commissioner of
Competition, John Pecman, released a statement stating that he was,
"disappointed that the Tribunal had dismissed the Bureau's
application," and indicated that the Bureau will be reviewing
the Tribunal's decision to determine its next steps.
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The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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