The Commission has fined Visa €10 200 000 for a serious infringement of the EC Treaty and EEA Agreement rules on restrictive business practices (Article 81 of the EC Treaty and Article 53 of the EEA Agreement). From March 2000 to September 2006, Visa refused to admit Morgan Stanley as a member without an objective justification. The Commission found that the exclusion of Morgan Stanley from Visa membership restricted competition in the provision of credit card acceptance services to merchants in the United Kingdom. Morgan Stanley had concrete plans and expertise to contribute to more efficient competition and generate positive effects on prices and the quality of service in a highly concentrated market.
The Commission opened an investigation following a complaint submitted by Morgan Stanley in 2000. In 1999, Morgan Stanley incorporated Morgan Stanley Bank in the UK and in 2000 Morgan Stanley Bank sought to become a member of the Visa organisation, which Visa refused.
At the time of the infringement, the Morgan Stanley group owned the Discover card network in the US. However, Discover was not present on the EU market. Until Visa finally admitted Morgan Stanley Bank as a member in September 2006, the card operations of Morgan Stanley in the EU were confined to issuing MasterCard cards in the UK. The Commission's investigation revealed that retailers expect banks to offer card acceptance contracts as a package including both Visa and MasterCard. Therefore, Visa's refusal to admit Morgan Stanley as a member not only prevented Morgan Stanley from providing services to merchants as regards Visa transactions (which represent about 60% of the market), but also as regards other payment cards transactions.
In the UK, the market for providing merchants with card acceptance capabilities (the so-called "acquiring" market) is highly concentrated and there is scope for further competition. Within the very narrow circle of possible entrants, Morgan Stanley is one of the few operators to actually have envisaged entry onto the UK acquiring market. Morgan Stanley had the necessary qualifications to operate efficiently on the market. Consequently, Morgan Stanley's entry into the UK acquiring market could be reasonably expected to contribute to more efficient competition in the UK and have a positive effect on prices and the quality of acquiring services.
As a reason to prevent Morgan Stanley's membership, Visa invoked an internal rule according to which Visa would not accept as a member any applicant which is deemed by the board of directors to be a competitor. However, the Commission's investigation showed that Morgan Stanley was not a competitor of Visa in the EU because it had no payment card network and - given the high entry barriers to the networks market - there was no realistic possibility that Discover, Morgan Stanley's US card network, would expand to the EU. Furthermore, the rule was applied in a discriminatory manner, as Visa admitted Citigroup (the owner of the Diners Club network) and several shareholders of JCB Co. Ltd. (the owner of the JCB network) as Visa members.
In August 2004 the Commission sent Visa a Statement of Objections, setting out the findings of its investigation. Subsequently, Visa concluded a settlement agreement with Morgan Stanley in September 2006 and admitted the latter as a Visa member. As a consequence, Morgan Stanley withdrew its complaint with the Commission.
Although the complaint was withdrawn and the infringement ceased, the Commission decided to impose a fine as Morgan Stanley was excluded from the UK acquiring market for six and a half years - including more than 2 years after the Commission had sent a Statement of Objections to Visa. [3 October 07]