On 8 May a hearing into anti-competitive conduct by Visa and Mastercard commenced in the Canadian Competition Tribunal (the Tribunal). The Canadian Competition Bureau (the Bureau) is challenging Visa and MasterCard's rules under the price maintenance provisions of the Competition Act.
The Bureau launched its investigation in response to complaints by merchants and initiated a formal inquiry in April 2009. In December 2010 the Bureau filed an application with the Tribunal to strike down restrictive and anti-competitive rules that Visa and MasterCard impose on merchants who accept their credit cards.
The Bureau alleges that in effect these rules have eliminated competition between Visa and MasterCard for merchants' acceptance of their credit cards, resulting in increased costs to businesses and, ultimately, consumers. Merchants in Canada pay an estimated CA$5 billion annually in hidden credit card fees. The Bureau alleges that Visa and MasterCard's practices result in higher prices for all consumers, whether they pay by cash, cheque, debit or credit, because merchants pass along some or all of the high costs they are forced to pay as a result of Visa's and MasterCard's anti-competitive rules.
Visa and MasterCard operate the two largest credit card networks in Canada.Together they reportedly processed more than 92 percent of all credit card transactions by Canadian consumers in 2011, representing more than CA$322 billion in purchases.