Visa 2015 Annual Report Download - page 32

responsibility plan addresses only the U.S. covered litigation. The plan generally does not cover other
pending litigation or any litigation that we may face in the future, except for cases that include claims
for damages relating to the period prior to our IPO that are transferred to or otherwise included in the
interchange multidistrict litigation or that are brought by a Rule 23(b)(3) opt out and arise out of facts or
circumstances substantially similar to those alleged in MDL 1720. In addition, non-monetary settlement
terms and judgments in the U.S. covered litigation may require us to modify the way we do business.
Therefore, even if our U.S. retrospective responsibility plan provides us with adequate funding to
satisfy our obligations with respect to monetary liabilities from settlements of, and judgments in, the
U.S. covered litigation, it will not insulate us from the monetary impact of pending or future litigation.
As described in Note 2—Visa Europe and Note 3—U.S. Retrospective Responsibility Plan and
Potential Visa Europe Liabilities to our consolidated financial statements included in Item 8 of this
report, on November 2, 2015, the Company and Visa Europe entered into a transaction agreement
pursuant to which the Company agreed to acquire Visa Europe. The closing is subject to various
conditions including regulatory approvals and is expected to occur in the fiscal third quarter of 2016.
Visa Inc., Visa Europe or their affiliates are, or may become, a party to certain existing and potential
litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory. As part
of the acquisition terms, the Company has obtained certain protection in respect of losses resulting
from such existing and potential litigation through the preferred stock and 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). However, similar to the U.S. retrospective responsibility plan, failure of these protections to
insulate us adequately from the impact of settlements or judgments in the existing and potential
litigation against Visa Inc., Visa Europe or their affiliates could result in a material adverse effect on our
financial condition and cash flows.
If we are found liable in other pending or future lawsuits, we may have to pay substantial
damages.
Like many other large companies, we are a defendant in a number of civil actions and
investigations alleging violations of competition or antitrust law, consumer protection law or intellectual
property law, among others. Examples of such claims are described more fully in Note 20—Legal
Matters to our consolidated financial statements included in Item 8 of this report. Some lawsuits involve
complex claims that are subject to substantial uncertainties and unspecified damages; therefore, we
cannot ascertain the probability of loss or estimate our liability. Accordingly, we have not established
allowances for such legal proceedings.
Particularly in cases involving merchants and consumers, private plaintiffs often seek class action
certification in cases against us due to the size and scope of our business. If we are unsuccessful in
our defense against a large class action lawsuit, such as the U.S. or Canadian merchant class action
lawsuits, monetary damages could be significant, which could harm our financial condition. See Note
20—Legal Matters to our consolidated financial statements included in Item 8 of this report.
There may be limitations on our business or changes to our business practices resulting from
our litigation.
Certain limitations have been placed on our business in recent years because of litigation. We
may also have to change our business practices in response to pending or future litigation. For
example, under the settlement agreement in the interchange multidistrict litigation, we have agreed,
among other things, to permit merchants to add surcharges to credit transactions in certain
circumstances. See Item 8—Financial Statements and Supplementary Data—Note 20—Legal Matters
included elsewhere in this report. Additional surcharges to credit transactions could adversely impact
consumers’ usage of Visa-branded payment products.
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