Visa 2012 Annual Report Download - page 111

Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
breach of Article 81 of the EC Treaty and Article 53 of the EEA Agreement. The SO was directed to Visa Inc. and Visa International
with respect to the
“Honor All Cards” rule, the “no-surcharge” rule, and certain debit interchange fee practices. On August 10, 2009,
Visa Inc. and Visa International filed a response to the SO.
On April 26, 2010, Visa Europe announced an agreement with the European Commission, subject to public consultation, to
end the proceedings with respect to Visa Europe's immediate debit interchange fees. After public consultation, on December 8,
2010, the European Commission concluded that the proposed agreement with Visa Europe addressed its competition concerns,
made the agreement legally binding upon Visa Europe, and closed its investigation with regard to interchange fees for debit card
transactions. On July 31, 2012, the European Commission announced a supplementary Statement of Objections that was sent to
Visa Europe concerning interchange for consumer credit card transactions. Pursuant to existing agreements among the parties,
Visa Europe is obligated to indemnify Visa International and Visa Inc. in connection with this proceeding, including payment of any
fines that may be imposed.
Canadian Competition Proceedings
Competition Bureau. On April 21, 2009, Visa Canada Corporation (“Visa Canada”) received an oral notification from the
Canadian Competition Bureau that it had initiated a civil inquiry regarding interchange and certain of Visa policies relating to
merchant acceptance practices. The Bureau issued a voluntary draft information request to Visa on August 4, 2010, seeking
information about certain merchant acceptance practices, interchange (including the setting of default interchange), and fees paid
by issuers and acquirers to Visa.
On December 15, 2010, the Commissioner of Competition filed a Notice of Application against Visa Canada and MasterCard.
The proceeding challenges certain Visa policies regarding merchant acceptance practices, including Visa's “no-surcharge” and
“honour all cards” policies under the Competition Act. Visa Canada filed a Response to the Notice of Application on January 31,
2011. On February 10, 2011, Toronto Dominion Bank and the Canadian Bankers Association sought leave to intervene in the
proceeding; Visa supported such requests. Following a hearing on March 7, 2011, the Competition Tribunal granted the
intervention requests.
The hearing before the Competition Tribunal on the merits of the case was held from May 8, 2012 through June 21, 2012.
Merchant Litigation . On December 17, 2010, a purported civil follow-
on case to the Competition Bureau's proceeding was filed
against Visa Canada and MasterCard in the Superior Court of Québec, Canada, on behalf of a class of merchants and a class of
consumers. The action, 9085-4886 Quebec Inc. et al. v. Visa Canada et al. , asserts claims under Section 76 of the Competition
Act, which does not provide for a civil cause of action. Plaintiff seeks unspecified money damages and injunctive relief.
On March 28, 2011, Mary Watson filed a class action lawsuit in the Supreme Court of British Columbia, Canada, on behalf of
merchants and others in Canada that accept payment by Visa and MasterCard ( Watson ). The suit, filed against Visa Canada,
MasterCard, and ten financial institutions, alleges conduct contrary to section 45 of the Competition Act and also asserts claims of
civil conspiracy, interference with economic interests, and unjust enrichment, among others. Plaintiff alleges 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 “honour all cards” rules had the anticompetitive effect
of increasing merchant discount fees. The lawsuit seeks unspecified monetary damages and injunctive relief. On January 9, 2012,
plaintiff filed a notice of application for certification of a class action. Defendants' responding certification material was delivered on
October 15, 2012.
On May 16, 2011, a merchant class action which effectively mirrors the Watson case was initiated in Ontario ( Bancroft-Snell
).
As in Watson , the Bancroft-Snell complaint alleges conduct in contravention of Section 45 of the Competition Act, civil conspiracy,
interference with economic interests, and unjust enrichment, among other claims, and seeks similar relief. As a result of plaintiff's
unopposed request on January 10, 2012, the Bancroft-Snell case is being held in abeyance pending further proceedings in the
Watson case.
On April 10, 2012, the court in the 9085-4886 Quebec Inc. case permitted the plaintiff to revise its complaint to effectively
mirror the Watson case, and to add the same ten financial institutions as co-defendants. On June 13,
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