Jurisdiction - Australia
Reports and Analysis
Australia – Visa Claimed To Have Misused Its Market Power.

27 September, 2013

 

 

The Australian Competition and Consumer Commission (ACCC) recently filed an amended statement of claim in its ongoing proceedings against Visa Inc.

 

The ACCC brought the proceedings in February 2013 alleging that Visa had misused its market power in relation to the supply of dynamic currency conversion (DCC) services, in contravention of section 46 of the Competition and Consumer Act (which is broadly equivalent to the prohibition of abuse of a dominant position under Article 102 TFEU).


DCC services allow payment cardholders shopping at a retail store (or withdrawing cash at an ATM) in a different country the choice of completing a transaction in their home currency or in the local currency. If a cardholder chooses to use DCC services, the applicable exchange rate is disclosed to the cardholder at the time of making the purchase or withdrawal, thereby providing certainty about the overall cost of the transaction.


The ACCC alleges that Visa has substantial market power through its operation of the world’s largest retail electronic payments processing network, and that a significant proportion of purchases and cash withdrawals in Australia are conducted using Visa payment cards.


The ACCC further alleges that Visa misused its market power for the purpose of preventing or restricting competing DCC services, and that it did so in order to protect the revenue that Visa earns when a cardholder uses Visa’s own currency conversion service. (The ACCC alleges that Visa earns more when it supplies the DCC services itself as it receives the spread between the buy and sell exchange rates and a multi-currency transaction fee, as opposed to a lower single-currency transaction fee). The ACCC claims that:


• between May and October 2010, Visa prohibited DCC processors, acquirers and merchants from offering DCC services to Visa international cardholders in relation to transactions conducted at merchant outlets in Australia that had not already been offering DCC services to Visa customers as at 30 April 2010; and
• since at least October 2007, Visa prohibited DCC processors and acquirers from offering DCC services at ATMs in Australia to Visa international cardholders. It is specifically alleged that Visa refused requests from ANZ, Westpac and Travelex for permission to offer DCC services to Visa customers seeking to withdraw cash in Australia.


The ACCC argues that Visa imposed these restrictions because it believed that users of Visa’s payment card network were unlikely to significantly decrease their use of the network in response.


Visa has denied the allegations. The outcome of the case could have potentially significant consequences for the way Visa operates. The ACCC has stated that Visa imposed similar restrictions on competing DCC services in many other countries, meaning that the case could have significant international implications.

 

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For further information, please contact:

 

Neil Cuninghame, Partner, Ashurst
neil.cuninghame@ashurst.com

 

Mats Johnsson, Partner, Ashurst
mats.johnsson@ashurst.com 

 

Ashurst Competition & Anti Trust Practice Profile in Australia 

 

Homegrown Competition & Antitrust Law Firms in Australia

 

International Competition & Antitrust Law Firms in Australia

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