Visa 2015 Annual Report Download - page 139

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2015
High Court (Commercial Court) and an unsuccessful appeal by the claimants, the claims of U.K.
merchants should be limited to the six year period immediately preceding the issuance of each claim.
In addition, since March 2013, in excess of 20 additional merchants (together with subsidiary/
affiliate companies) have threatened to commence proceedings against Visa Europe, Visa Inc., and
Visa International with respect to interchange rates in Europe. Visa Europe, Visa Inc., and Visa
International entered into standstill agreements with respect to some of those merchants’ claims. While
the amount of interchange being challenged could be substantial, these claims have not yet been filed
and their full scope is not yet known.
Altogether, therefore, merchants accounting for more than 50% of U.K. retail sales have either
filed claims or preserved their right to do so. The amount of interchange being challenged is
substantial. Although not all of the merchant claims have been served and thus the full scope of the
claims is not yet known, and there are substantial defenses to these claims, the total damages sought
in the claims that have been served amount to several billion dollars.
The Company has learned that several additional European merchants have indicated that they
may bring claims against Visa Europe, Visa Inc. and/or Visa International with respect to interchange
rates in Europe. We anticipate that similar claims may be asserted by additional merchants in the
future.
In our view, pursuant to the parties’ agreements, Visa Europe is obligated to indemnify Visa Inc.
and Visa International in connection with the European Competition Proceeding and the U.K. Merchant
Litigation, including payment of any fines or damages that may be imposed. However, Visa Europe has
informed Visa Inc. of its view that it is not obligated to indemnify Visa Inc. or Visa International for these
claims. The parties have initiated the executive engagement aspect of the dispute resolution procedure
contemplated by the Framework Agreement to resolve this dispute. If the acquisition of Visa Europe is
not completed, this dispute may continue. However, if the acquisition is completed, Visa Europe will
become wholly owned by Visa Inc. In these circumstances, Visa Inc.’s protection in respect of losses
suffered pursuant to the claims which are covered by the transaction protections described in Note 2—
Visa Europe and Note 3—U.S. Retrospective Responsibility Plan and Potential Visa Europe Liabilities
will be pursuant to the terms of the preferred stock and/or the U.K. loss sharing agreement. If claims
are not covered by these transactional protections, Visa Europe may have recourse under its
membership documents against members under the terms of the existing indemnity arrangements
(other than in respect of certain claims relating to U.K. domestic multilateral interchange fees).
Other Litigation
“Indirect Purchaser” Actions
From 2000 to 2004, complaints were filed on behalf of consumers in nineteen different states and
the District of Columbia against Visa and MasterCard. The complaints alleged, among other things,
that Visa’s “honor all cards” rule and a similar MasterCard rule violated state antitrust and consumer
protection laws, and common law. The claims in these class actions asserted that merchants, faced
with excessive merchant discount fees, passed on some portion of those fees to consumers in the form
of higher prices on goods and services sold. Plaintiffs sought money damages and injunctive relief.
Visa has been successful in the majority of these cases, and has resolved the cases in all jurisdictions
but California.
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