action
Expressing, in the strongest terms, its abhorrence of restrictive
business practices in the electronic payments industry, the EC has
imposed a €10.2 million ($14.5 million) fine on Visa Europe. The
fine was a sequel to a complaint against Visa Europe made by US
investment bank Morgan Stanley in March 2000, following Visa’s
refusal to admit UK-based Morgan Stanley Bank as a member.
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“The payment cards industry plays a key role in the creation and
functioning of the single market for payments,” said Neelie Kroes,
European Commissioner for Competition. “The commission will not
tolerate anti-competitive behaviour and will intervene if companies
are illegally refused membership of payment card networks.”
Visa’s decision not to admit Morgan Stanley Bank was based on an
internal rule preventing acceptance as a member of an applicant
deemed by Visa’s directors to be a competitor.
At the time, Morgan Stanley owned Discover Card, the third-largest
credit card brand in the US. Discover Card was spun off as an
independent company earlier this year.
In September 2006, Visa admitted Morgan Stanley Bank as a member
and Morgan Stanley withdrew its complaint. However, this did not
satisfy the EC, which continued to pursue its investigation and
ultimately hand down a harsh judgment against Visa.
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By GlobalDataThe EC found that the exclusion of Morgan Stanley Bank from Visa
membership restricted competition in the provision of credit card
acceptance services to merchants in the UK. According to the EC,
Morgan Stanley Bank had plans and expertise to contribute to more
efficient competition and generate positive effects on prices and
the quality of service in a highly concentrated market. Until
September 2006, Morgan Stanley Bank was limited to issuing
MasterCard cards in the UK.
The EC also ruled that Visa applied its rule precluding competitors
as members in a discriminatory manner. Notably, Visa had admitted
as members US bank Citigroup, the owner of the Diners Club card
network, and Japanese card issuer JCB.
Reacting to the fine imposed by the EC, Visa Europe’s president and
chief executive, Peter Ayliffe, said: “We will appeal this
decision. We do not believe that Visa Europe infringed EU
competition law.”
