The Consumers Council of Canada welcomes the decision of the Competition Tribunal in the case of The Commissioner of Competition v. Visa Canada Corporation and MasterCard International Incorporated et al.
The Tribunal rejected the application of the Commissioner of Competition, which would have permitted surcharging of consumers for premium credit cards and resulted in some credit cards being treated differently than other cards at the whim of merchants.
The Tribunal did not choose to permit new charges to consumers as a remedy for price maintenance concerns highlighted by the case. As well, in an unusual and welcome move, the Tribunal underscored the need for regulation in this area to satisfy the concerns of merchants and to protect consumers from excess charges that arise in the current competitive environment.
The Council will review the complete decision of the Tribunal once that becomes public. It will monitor closely any regulatory actions of the Government of Canada that may result from today’s decision by the Competition Tribunal to ensure that any regulations reflect consumer concerns.
The Council concurs with the Tribunal’s view that actions taken in other jurisdictions that permitted surcharging by retailers as a response to competition concerns have demonstrated “concerns would be raised by consumers … rather sooner than later.”
“Consumers must be protected from price surprises at point of payment,” said Don Mercer, Vice President and chair of the Council’s financial services issues committee. “Consumers, merchants and the payments networks all benefit when controversy is not a feature of payment at any time, and certainly not at the till.
“Consumers will not take kindly to increasing the cost or complexity of their payments experience, and the Tribunal’s decision reflects that concern.”
The Tribunal’s judgment notes the “proper solution to the concerns raised by the Commissioner is a regulatory framework.”
“The Council also considers this debate a matter for public policy and would welcome the opportunity for consumers to participate,” Mercer said. “This would be better than having retailers, networks and payment industry participants argue about what is best for consumers.”
In December 2010, the Competition Bureau filed an application with the Competition Tribunal against Visa and MasterCard for restrictive and anticompetitive rules on merchants who accept their cards. This followed complaints from merchants that credit card company rules had effectively eliminated competition, resulting in higher costs to business and ultimately consumers. In specific, credit card rules that required a merchant to honour all cards – including premium reward cards with higher transaction fees – and rules that prevent merchants from charging additional fees for purchases made by credit card forced merchants to consider credit card transaction fees when setting prices charged to all consumers. The Bureau suggested that merchants in Canada pay an estimated $5 billion annually for the credit card fees in dispute.
In submissions to the Tribunal in May 2012, the credit card companies emphasized that the rules served to protect consumer interests: consumers could be confident that their card would always be accepted and would not be charged additional fees at the point of sale.
The Consumers Council of Canada works collaboratively with consumers, business and government in support of consumers’ rights and responsibilities, seeking an efficient, equitable, effective and safe marketplace for consumers.
