Visa 2013 Annual Report Download - page 129

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
the United Kingdom. While the amount of interchange being challenged could be substantial, no claims
have yet been filed and the full scope of the claims is not yet known.
Visa Europe is obligated to indemnify Visa Inc. and Visa International in connection with the
European Competition Proceedings, in our opinion, including payment of any fines that may be
imposed. However, Visa Europe has expressed an “initial” view that it is not obligated to indemnify Visa
Inc. or Visa International for any claim in the European Competition Proceedings, including claims
asserted in both the European Commission matter and the U.K. Merchant Litigation. Visa Inc.
continues to firmly believe that Visa Europe is obligated to indemnify for all such claims, and has been
in discussions with Visa Europe to resolve this issue. While the parties are not currently in non-binding
arbitration, both parties have initiated the executive engagement aspect of the dispute resolution
procedure contemplated by the Framework Agreement to resolve their dispute regarding this
indemnification issue.
Canadian Competition Proceedings
Competition Bureau. On December 15, 2010, following a civil inquiry regarding interchange and
certain Visa policies related to merchant acceptance practices, the Commissioner of Competition filed
a Notice of Application against Visa Canada Corporation (“Visa Canada”) and MasterCard. The
proceeding challenged certain Visa policies regarding merchant acceptance practices, including Visa’s
“no-surcharge” and “honor all cards” policies under the Competition Act.
The hearing before the Competition Tribunal on the merits of the case was held from May 8, 2012
through June 21, 2012. On July 23, 2013, the Competition Tribunal ruled in favor of Visa Canada and
MasterCard, dismissing the Commissioner of Competition’s challenges to Visa’s “no-surcharge” and
“honor all cards” policies. The Competition Tribunal found that the Commissioner failed to establish
that either policy constituted resale price maintenance under Section 76 of the Competition Act. The
Commissioner did not file an appeal prior to the deadline of September 30, 2013.
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. The purported class action lawsuits
allege conduct contrary to Section 45 of the 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. The
lawsuits seek unspecified monetary damages and injunctive relief.
In the British Columbia lawsuit, a hearing on class certification commenced on April 22, 2013 and
concluded on May 1, 2013. The lawsuits in Quebec, Ontario, and Alberta are being held in abeyance
pending further proceedings in the British Columbia lawsuit. In Saskatchewan, applications for a stay of
proceedings and carriage of the lawsuits have been filed.
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
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