In a ruling from Ottawa yesterday, Canada’s Competition Tribunal dismissed the case against Visa Canada Corporation and MasterCard International Incorporated (CT-2010-10), without costs, noting that some of the reasons for the decision are confidential. The Commissioner of Competition sought an order that would have allowed merchants to refuse, discourage or impose surcharges on the use of premium cards that impose higher fees.
The Tribunal found that section 76 of the Competition Act requires a resale and that the Commissioner of Competition had not established that the Respondents’ customers resell the Respondents’ products. The Tribunal further held that the Commissioner’s proposed interpretation of section 76 was not supported by the legislative history of the provision or other decisions.
However, in the event that the Tribunal was wrong with respect to the legal interpretation of section 76, it continued with its analysis. Under this alternative analysis, it assumed that each of the Respondents engaged in price maintenance (as the Commissioner had attempted to define the term) by implementing the no-surcharge rule, a rule which prohibits merchants from applying a surcharge for those customers paying with credit cards. The Tribunal found in that situation that there had been an adverse effect on competition.
However, the Tribunal found that even under this alternative analysis, it would have declined to issue an order and noted that the proper solution to the concerns raised by the Commissioner is a regulatory framework. In that regard, it noted that the experience in other jurisdictions showed that concerns would be raised by consumers regarding surcharging and that rather sooner than later, intervention would have to take place by way of regulation.
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.
Three years ago, the Government of Canada released the Code of Conduct for Credit and Debit Card Industry, which promotes fair business practices and ensures that merchants and consumers understand the costs and benefits associated with credit and debit cards. In response to the ruling, the Minister of Finance, Jim Flaherty, announced that he will be carefully reviewing the decision and also monitoring any potential appeal. He has also requested that a special meeting be convened of the Government’s FinPay Committee – a consultative committee on payments issues that includes representatives from the credit card industry, small business, retailers, consumers, and many more – to discuss this matter and next steps.