Visa 2014 Annual Report Download - page 142

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2014
Canadian Competition Proceedings
Merchant Litigation. Beginning in December 2010, a number of purported civil follow-on cases to
the Competition Bureau’s proceeding were filed in Quebec, British Columbia, Ontario, Saskatchewan,
and Alberta against Visa Canada, MasterCard, and ten financial institutions on behalf of purported
classes of merchants and others that accept payment by Visa and MasterCard. In Saskatchewan, a
separate action was filed against Visa Canada Corporation and Visa Inc., two MasterCard entities, and
a number of smaller Canadian issuing banks that are not named as defendants in any of the existing
proceedings. The purported class action lawsuits allege conduct contrary to Section 45 of Canada’s
Competition Act and also assert claims of civil conspiracy, interference with economic interests, and
unjust enrichment, among others. Plaintiffs allege that Visa and MasterCard each conspired with their
member financial institutions to set supra-competitive default interchange rates and merchant discount
fees, and that Visa and MasterCard’s respective “no-surcharge” and “honor all cards” policies had the
anticompetitive effect of increasing merchant discount fees.
On March 26, 2014, the British Columbia Supreme Court, in Watson v. Bank of America
Corporation, et al., granted the plaintiffs’ application for class certification in part, allowing plaintiffs to
proceed as a class on, among other claims, claims for price fixing under Canada’s Competition Act.
Both plaintiff and defendants are appealing aspects of the certification decision to the British Columbia
Court of Appeal. The lawsuits in Quebec, Ontario, Alberta, and Saskatchewan are either being held in
abeyance or are effectively stayed pending further proceedings in the British Columbia lawsuit.
The pending Canada Merchant Litigation lawsuits largely seek unspecified monetary damages
and injunctive relief, but some allege substantial damages.
Dynamic Currency Conversion
On February 4, 2013, following an investigation into Visa’s policies relating to the provision of
Dynamic Currency Conversion (DCC), the Australian Competition and Consumer Commission
(“ACCC”) commenced proceedings in the Federal Court of Australia against Visa Inc., Visa U.S.A.,
VWPL, and Visa AP (Australia) Pty Limited alleging that certain Visa policies related to the provision of
DCC services contravened Australian competition law. The ACCC later filed an amended claim adding
Visa International as a respondent. DCC refers to conversion from one currency to another, either of
the price of goods or services by the merchant, or of cash withdrawals by an ATM. Among other things,
the ACCC alleges that: (1) from May 2010 to October 2010, Visa prohibited DCC services with respect
to transactions on Visa international payment cards conducted at Australian merchant outlets that had
not previously been conducting DCC transactions; and (2) from at least May 2007, Visa prohibited
DCC services with respect to cash withdrawals at Australian ATMs on Visa international payment
cards. The ACCC seeks declaratory relief and a monetary penalty. The potential amount of any penalty
cannot be estimated at this time.
Data Pass Litigation
On November 19, 2010, a consumer filed an amended class action complaint against
Webloyalty.com, Inc., Gamestop Corporation, and Visa Inc. in federal district court in Connecticut. The
plaintiff claims, among other things, that consumers who made online purchases at merchants were
deceived into also incurring charges for services from Webloyalty.com through the alleged
unauthorized passing of cardholder account information during the sales transaction (“data pass”), in
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