On 18 September 2013, the Competition Commission of Singapore (CCS) issued a media statement clearing Visa's Multilateral Interchange Fee (MIF). In the statement, the CCS indicated that the MIF does not have an appreciable adverse effect on competition in any of the relevant markets in Singapore.
This decision was a result of a notification made by Visa Worldwide on 1 January 2006, the date the Competition Act, Chapter 50B of Singapore (Competition Act) came into force when competition law in Singapore was still in its infancy.
Due to the complexity of the notified agreement, the CCS had to consult with a significant number of relevant stakeholders which included the merchants, banks, payment processors, and card schemes. The CCS also conducted an extensive survey of merchants and industry categories in Singapore to gather feedback on any concerns regarding card payments.
After conducting the necessary consultations, the CCS considered the current state of competition in the relevant markets, and compared it to the scenario where MIF was not in place. This process was similar to the application of the counterfactual in merger control notifications. In this regard, the conclusion the CCS reached was that competition in the relevant markets would not be more intense without the MIF; instead there may be barriers to entry and expansion for certain players (such as new acquirers) since there would be little incentive for the larger banks that are both issuers and acquirers, to reach bilateral agreements with them. The CCS therefore took the view that the MIF did not have an appreciable adverse effect on any relevant market.
The relevant markets defined in Singapore were:
- the market involving bank issuers in Singapore;
the market involving Visa acquirers in Singapore; and
- the market for the card scheme administration in Singapore.
The position taken by the CCS concludes a notification which has been overdue for some time. The CCS’ decision however is significantly different to the position taken in Europe where the European Commission proposed regulating the interchange fees between banks in Europe by introducing, among other things, statutory maximum charges that can be imposed for such fees.