Competition Tribunal dismisses case against credit card companies

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 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.”'

With files from Reuters.

Update 12:10 pm: comments from the Competition Bureau added.

Free newsletter

The Canadian Legal Newswire is a FREE weekly newsletter that keeps you up to date on news and analysis about the Canadian legal scene. A separate InHouse Edition is delivered every two weeks, providing targeted news and information of interest to in-house counsel.

Please complete the form below to receive the weekly Canadian Legal Newswire and/or the Canadian Inhouse Legal Newswire.

Recent articles & video

Daphne Dumont to receive CBA’s Cecilia I. Johnstone award

Quebec taking harsh line on cannabis edibles

Will the conversation catalyzed by the Law Society of Ontario mean the end of articling?

Copyright law: set for an overhaul?

Corporate Counsel Survey 2019 closes on Monday, Aug 26

When Legal Aid is a political prop, Access to justice suffers

Most Read Articles

The Ontario government is destroying university legal clinics

Will the conversation catalyzed by the Law Society of Ontario mean the end of articling?

Quebec taking harsh line on cannabis edibles

When Legal Aid is a political prop, Access to justice suffers