Competition Bureau initiates hearings on credit card rules
By Canadian Pizza
By Canadian Pizza
December 15, 2010, Ottawa – The Competition Bureau announced today that it agrees with complaints from the Canadian Restaurant and Foodservices Association (CRFA) and restaurant operators that Visa and MasterCard rules are “restrictive and anti-competitive.”
The CRFA took its complaints about unfair rules imposed by credit card companies to the Competition Bureau in 2009, and in April of that year, the Competition Bureau initiated a formal enquiry. The Bureau has now filed an application with the Competition Tribunal to strike down the unfair rules imposed on merchants who accept credit cards.
“A duopoly in credit cards has led to significantly higher costs for our members who accept credit cards, and many of them have little choice but to pass at least some of those costs onto their customers,” says CRFA president and CEO Garth Whyte. “Today’s announcement is a very significant step toward a more competitive, fair and transparent system that will benefit restaurateurs and consumers.”
The Competition Bureau is challenging the following rules:
• The “honour all cards” rule, which requires merchants to accept all credit cards from a specific network, including premium cards with higher fees;
• The “no surcharge” rule, preventing merchants from charging a fee on transactions made with Visa or MasterCard; and
• The “no discrimination” rule, preventing merchants from encouraging or discouraging customers from using certain credit cards.
In a news release, the CRFA announced that it will “participate as needed” in the Competition Tribunal hearings, and that it is “hopeful that the Competition Bureau challenge will result in a reining in of practices by credit card companies that force merchants and their customers to pay for reward programs for premium card holders.”