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Competition Tribunal dismisses case against credit card companies

|Written By Gail J. Cohen

The federal Competition Tribunal has dismissed a complaint against credit card issuers that had alleged the rules they impose on merchants who accept their cards are too restrictive and anti-competitive.

The Competition Tribunal says a regulatory framework is the proper solution to remedy credit card complaints. (Photo: Shutterstock)

The proper solution to the concerns raised by the Commissioner is a regulatory framework,” the three-member panel said in one-page summary of the decision released this morning.

The ruling follows an application in late 2010 by the Competition Bureau, a body separate from the tribunal, to strike down the rules.

The decision by the quasi-judicial government panel means credit card providers may continue to impose rules that prohibit merchants from discouraging customers from using higher-cost credit cards or from passing card fees along to customers.

Competition Commissioner John Pecman said the bureau will be reviewing the decision closely before determining next steps.

"I am disappointed that the tribunal has dismissed the bureau's application," said Pecman. "At the same time, the decision recognized that this case is one that should have been brought before the tribunal and found that Visa and MasterCard's conduct had an adverse effect on competition."

The bureau maintains that Canadian merchants pay too much in credit card fees meaning all Canadians end up paying higher prices.

"Without changes to Visa and MasterCard's rules, merchants will continue to pay excessively high card acceptance fees, and these fees will continue to be passed along to consumers in the form of higher prices for goods and services," said Alison Tait, deputy commissioner of competition, civil matters branch.

“We want our cardholders to know that wherever they see the MasterCard emblem they can use any MasterCard confidently without extra charges tacked on and without discrimination,” said MasterCard Canada president Betty K. DeVita in a statement.

She said the ruling is also good news for merchants.

“We only succeed when retailers and consumers succeed,” said DeVita. “The data proves that retailers that accept MasterCard see an increase in sales and reduce their costs of handling cash and record keeping. We are pleased that we will continue to be able to protect consumers from unfair or unexpected fees at checkout.”

Canada’s credit card market is dominated by Visa Inc and MasterCard Inc, which together control about 90 per cent of the market. Their cards are mostly issued by domestic lenders.

The tribunal’s reasons are confidential “in order to protect properly confidential evidence,” according to the summary. “A public version of the decision will issue as soon as possible after a determination as to what information must remain confidential has been made.”'

[em]With files from Reuters.

Update 12:10 pm: comments from the Competition Bureau added.[/em]

  • Rudy Haugeneder
    First, merchants should post how much in fees they are paying, allowing the consumer to know exactly how much the credit card companies are ripping them off, in addition to interest consumers must pay direct to the companies for use of their cards.
    Also, it seems to me that some business organizations with large memberships should be large enough to set up their own credit card banks -- similar to business credit unions -- and charge fees their members think fair. If unfair, the boards of directors would be fired or the membership would simply transfer to organizations offering the best rates.
    Time for businesses to act and kick ass rather than bend over to big banks and Visa and MasterCard. Or is business -- small, medium and large -- all talk and no action, as appears to be the case.

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