On June 26, 2014, the Commissioner of Competition (the "Commissioner") delivered a keynote speech at the Canadian Payments Association's Payment Panorama Conference. The key focus of the Commissioner's remarks was the (i) Bureau's approach to interchange fees following the Competition Tribunal's decision in the Visa/MasterCard case, (ii) recent changes to the Interac Consent Agreement and (iii) rapid growth of mobile payment platforms.

Enforcement Approach to Interchange Fees

The Commissioner noted that many antitrust agencies around the world (including Australia, New Zealand and the United States) have taken enforcement action to address concerns regarding both interchange fees and rules imposed by credit card networks that limit or prevent competition (for example, "honour all cards" rules).

While the Competition Tribunal dismissed the Visa/MasterCard application, the Commissioner noted that the Tribunal's decision did find that the actions of the two credit card companies was having an adverse effect on competition. Given the ongoing concerns, the Commissioner indicated that the Bureau's focus will be on identifying other ways to address competition issues related to credit cards services. This will include working with the federal government and others stakeholders to advocate for changes in this sector. In this regard, the Commissioner noted that Finance Canada is currently looking at refreshing its Code of Conduct for the Credit Card and Debit Card Industry in Canada.

Changes to Interac Consent Agreement

In 1996, the Bureau and the Interac Association (Canada's leading debit card network) entered into a Consent Agreement (the "Agreement") which addressed potential competition law concerns. In 2013, following an extensive analysis of the rapidly evolving payments industry and discussion with Interac and other market participants, the Commissioner concluded that there had been material changes that warranted a variation of the Agreement.

Specifically, the changes to the Agreement will allow Interac to restructure from an unincorporated association to a corporation with an independent board and operate under a cost-recovery model. According to the Commissioner, allowing Interac to implement this new structure will enhance its ability to remain a viable low-cost payment option for merchants in an increasingly competitive marketplace.

Mobile Payments

Noting the rapid growth in mobile payments, the Commissioner highlighted the potential challenges in terms of regulatory and competition policy issues associated with the development of this sector of the industry. A key issue that regulators will have to address is the global nature of these payment platforms, which will require the Bureau to closely work with its international counterparts to address potential competition law issues related to mobile payments. In this regard, the Commissioner indicated that the Bureau is "keeping an eye on this emerging area" and would have serious concerns where, for example, a dominant model emerged that engaged in discriminatory conduct similar to that that lead to the original Interac Consent Agreement.

Conclusion

The Commissioner's speech clearly signals that that the payments sector continues to be a priority area for the Bureau. These remarks also indicate that the Bureau (i) is actively monitoring the sector, in particular with respect to impact of mobile payment platforms on the dynamics of the payments industry and (ii) will proactively initiate enforcement action where market participants are acting in an anti-competitive manner.

For a copy of the Commissioner's speech, please click here.

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