Visa 2013 Annual Report Download - page 89

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
In addition to the licenses, Visa provides Visa Europe with authorization, clearing and settlement
services for cross-border transactions involving Visa Europe’s region and the rest of the world. Visa
Europe must comply with certain agreed-upon global rules governing the interoperability of Visa’s
systems with the systems of Visa Europe as well as the use and interoperability of the Visa
trademarks. The parties will also guarantee the obligations of their respective clients and members to
settle transactions, manage certain relationships with sponsors, clients and merchants, and comply
with rules relating to the operation of the Visa enterprise. Under the Framework Agreement, the
Company indemnifies Visa Europe for claims arising from the Company’s or Visa Europe’s activities
that are brought outside of Visa Europe’s region; and Visa Europe likewise indemnifies the Company
for such claims brought within Visa Europe’s region. However, Visa Europe has expressed an “initial”
view that it is not obligated to indemnify the Company for any claim relating to the European
Competition Proceedings, including claims asserted in both the European Commission matter and the
U.K. Merchant Litigation. See Note 20—Legal Matters. The Company continues to firmly believe that
Visa Europe is obligated to indemnify the Company for all such claims.
The Company has not recorded liabilities associated with these obligations as the fair value of
such obligations was determined to be insignificant at September 30, 2013 and 2012, respectively. The
Company has determined that the value of services exchanged as a result of these various
agreements approximates fair value at September 30, 2013 and 2012, respectively.
Note 3—Retrospective Responsibility Plan
The Company has established several related mechanisms designed to address potential liability
under certain litigation referred to as the “covered litigation.” These mechanisms are included in and
referred to as the retrospective responsibility plan, or the plan, and consist of a litigation escrow
agreement, the conversion feature of the Company’s shares of class B common stock, the
indemnification obligations of the Visa U.S.A. members, an interchange judgment sharing agreement
and a loss sharing agreement.
Covered litigation consists of:
•the Discover Litigation. Discover Financial Services Inc. v. Visa U.S.A. Inc., Case
No. 04-CV-07844 (S.D.N.Y) (settled);
•the American Express Litigation. American Express Travel Related Services Co., Inc. v. Visa
U.S.A. Inc. et al., No. 04-CV-0897 (S.D.N.Y.), which the Company refers to as the American
Express litigation (settled);
•the Attridge Litigation. Attridge v. Visa U.S.A. Inc. et al., Case No. CGC-04-436920
(Cal. Super.);
•the Interchange Multidistrict Litigation. In re Payment Card Interchange Fee and Merchant
Discount Antitrust Litigation, 1:05-md-01720-JG-JO (E.D.N.Y.) or MDL 1720, including all
cases currently included in MDL 1720, any other case that includes claims for damages
relating to the period prior to the Company’s IPO that has been or is transferred for
coordinated or consolidated pre-trial proceedings at any time to MDL 1720 by the Judicial
Panel on Multidistrict Litigation or otherwise included at any time in MDL 1720 by order of any
court of competent jurisdiction and Kendall v. Visa U.S.A., Inc. et al., Case No. CO4-4276
JSW (N.D. Cal.); and
• any claim that challenges the reorganization or the consummation thereof; provided that such
claim is transferred for coordinated or consolidated pre-trial proceedings at any time to MDL
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