On June 26, 2014, the Commissioner of Competition (the
"Commissioner") delivered a keynote speech at the
Canadian Payments Association's Payment Panorama Conference.
The key focus of the Commissioner's remarks was the (i)
Bureau's approach to interchange fees following the Competition
Tribunal's decision in the Visa/MasterCard case, (ii)
recent changes to the Interac Consent Agreement and (iii) rapid
growth of mobile payment platforms.
Enforcement Approach to Interchange Fees
The Commissioner noted that many antitrust agencies around the
world (including Australia, New Zealand and the United States) have
taken enforcement action to address concerns regarding both
interchange fees and rules imposed by credit card networks that
limit or prevent competition (for example, "honour all
While the Competition Tribunal dismissed the
Visa/MasterCard application, the Commissioner noted that
the Tribunal's decision did find that the actions of the two
credit card companies was having an adverse effect on competition.
Given the ongoing concerns, the Commissioner indicated that the
Bureau's focus will be on identifying other ways to address
competition issues related to credit cards services. This will
include working with the federal government and others stakeholders
to advocate for changes in this sector. In this regard, the
Commissioner noted that Finance Canada is currently looking at
refreshing its Code of Conduct for the Credit Card and Debit
Card Industry in Canada.
Changes to Interac Consent Agreement
In 1996, the Bureau and the Interac Association (Canada's
leading debit card network) entered into a Consent Agreement (the
"Agreement") which addressed potential competition law
concerns. In 2013, following an extensive analysis of the rapidly
evolving payments industry and discussion with Interac and other
market participants, the Commissioner concluded that there had been
material changes that warranted a variation of the Agreement.
Specifically, the changes to the Agreement will allow Interac to
restructure from an unincorporated association to a corporation
with an independent board and operate under a cost-recovery model.
According to the Commissioner, allowing Interac to implement this
new structure will enhance its ability to remain a viable low-cost
payment option for merchants in an increasingly competitive
Noting the rapid growth in mobile payments, the Commissioner
highlighted the potential challenges in terms of regulatory and
competition policy issues associated with the development of this
sector of the industry. A key issue that regulators will have to
address is the global nature of these payment platforms, which will
require the Bureau to closely work with its international
counterparts to address potential competition law issues related to
mobile payments. In this regard, the Commissioner indicated that
the Bureau is "keeping an eye on this emerging area" and
would have serious concerns where, for example, a dominant model
emerged that engaged in discriminatory conduct similar to that that
lead to the original Interac Consent Agreement.
The Commissioner's speech clearly signals that that the
payments sector continues to be a priority area for the Bureau.
These remarks also indicate that the Bureau (i) is actively
monitoring the sector, in particular with respect to impact of
mobile payment platforms on the dynamics of the payments industry
and (ii) will proactively initiate enforcement action where market
participants are acting in an anti-competitive manner.
For a copy of the Commissioner's speech, please click here.
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