The ACCC yesterday commenced proceedings against Visa alleging misuse of market power and exclusive dealing in relation to the supply of dynamic currency conversion (DCC) services. The ACCC is alleging that Visa has market power in a number of markets, and took advantage of that market power for the purposes of preventing the expansion of DCC to new merchant outlets in Australia; and preventing businesses in Australia from supplying their own DCC services in competition with Visa.
The ACCC also alleges that Visa engaged in exclusive dealing by supplying access to its payment network to Australian banks and in turn, retailers, on condition that they did not acquire DCC services from other DCC suppliers.
The ACCC’s concerns are that:
- travellers to Australia using a Visa payment card had no choice for currency conversion when withdrawing cash from an ATM and are denied the ability to know the cost of transactions in their own currency at the time the transaction is made;
- Australia retailers were denied the opportunity to share in the revenue from processing DCC transactions at new merchant outlets; and
- Australian suppliers of DCC services were, and continue to be, denied the opportunity to compete with Visa in relation to DCC services at ATMs.
This will be an interesting case to watch. It is the first time the ACCC has taken action in the payment systems area in more than 10 years, and certainly the first time the ACCC has taken action against a payment system that is under the direct regulatory oversight of the RBA (Visa is a designated payment system under the Payment Systems Regulation Act). Competition cases, particularly cases in relation to misuse of market power and anticompetitive effects, are usually large and protracted; the team at G+T will provide updates on further significant developments as they occur.
Of course, it is not the first antitrust litigation in relation to currency conversion. For over ten years in the United States, currency conversion issues have been the subject of antitrust class action litigation against the credit card companies and issuers, alleging a conspiracy to fix conversion rates. In addition, the US Department of Justice (like many antitrust regulators around the world) also prosecuted the credit card companies in relation to interchange fees. But what distinguishes this case is the nature of the allegations (ie misuse of market power and exclusive dealing), involving unilateral and vertical conduct of Visa (compared with previous cases where regulators have made allegations of horizontal conspiracy and price fixing involving other participants in the Visa scheme, and indeed also other schemes).
The link to the ACCC’s press release is here.