Canadian panel dismisses case against credit card companies
By Cameron French
TORONTO (Reuters) - Canada's Competition Tribunal has dismissed a complaint about the rules imposed on merchants by the Canadian arms of MasterCard Inc (MA.N: Quote) and Visa Inc (V.N: Quote), a victory not only for the card companies but for the banks that issue the cards.
The decision, released on Tuesday, means credit card providers may continue to prohibit merchants from imposing a surcharge on customers that use credit cards, especially premium cards.
The Competition Bureau, an independent enforcement agency, had argued that the credit-card company rules put customers at a disadvantage and suppress competition among card providers, and in 2010 it asked the tribunal to strike them down.
Typically, merchants must pay a fee ranging from 1.5 to 3 percent on card purchases, with higher fees charged for premium rewards cards. That compares with a processing fee of about 12 Canadian cents for an Interac debit transaction, the bureau said.
Retail groups have estimated these "hidden fees" amount to C$5 billion ($4.86 billion)-C$6 billion a year.
The bureau said the fees penalize cash customers because retailers are forced to raise prices for all customers to cover them, instead of raising prices only for card users.
In a summary of its decision, the tribunal agreed that the rules have an adverse effect on competition, but said that under its legal interpretation the relevant section of Canada's Competition Act does not apply. Continued...