Visa Fined 10.2 Million Euroes for Unlawfully Excluding Competitor in European Credit Network
The European Commission fined Visa €10.2 million for anti-competitive conduct that spanned more than six years, from March 2000 until September 2006. The Commission found that Visa, which controls roughly 60 percent of the European credit market, restricted Morgan Stanley from membership in its European network with discrimination.
The Commission ruled Visa’s exclusion of Morgan Stanley undercut competition in the entire market, with negative consequences to both consumers and merchants. First, Morgan Stanley was unable to offer Visa-branded credit cards to European consumers. Many merchants were also unable to contract with Morgan Stanley for an alternative to Visa’s credit card acceptance services. Because Visa and Mastercard services are often provided as a package to merchants, Visa’s conduct also affected Morgan Stanley’s participation in the broader financial network.
Morgan Stanley owned Discover during the time in question, although they are now separate firms. Discover did not and does not presently compete with Visa in the European market. The Commission believes that it is highly unlikely that Discover will ever enter into the European market, as doing so successfully is probably only possible with a substantial investment at a time when a credit system is in its infancy. Because the international credit market is highly concentrated, Visa’s exclusion of Morgan Stanley may stifled Morgan Stanley’s ability to compete with Visa in the US market.
The Commission is charged with enforcing many of the European Union’s Treaties, including a ban on restrictive business practices. Visa’s refusal to admit Morgan Stanley was found to be both unjustified and discriminatory.
The Commission rejected Visa’s major arguments. First, it held that even if the market gained any efficiencies by excluding Morgan Stanley, which was not proven, such potential efficiencies would not justify the cost of losing market innovations, nor reducing in the amount of services available to consumers and merchants.
Visa also argued that Morgan Stanley was excluded in part because of the need to protect confidential information. The Commission ruled that Visa failed to supply evidence which demonstrated such a risk that Morgan Stanley even would gain access to confidential information. It also ruled that any potential loss to confidentiality could have been mitigated by less severe means.
Finally, the Commission held that although there is a long-standing rule permitting market participants to exclude competitors from their system under most conditions, but that Visa’s anticompetitive behavior was unlawful because of the discriminatory application. Visa had previously admitted firms that competed with Visa other markets, such as Citigroup (Diners’ Club).
Discover is now a member of Visa’s European network.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
The Commission ruled Visa’s exclusion of Morgan Stanley undercut competition in the entire market, with negative consequences to both consumers and merchants. First, Morgan Stanley was unable to offer Visa-branded credit cards to European consumers. Many merchants were also unable to contract with Morgan Stanley for an alternative to Visa’s credit card acceptance services. Because Visa and Mastercard services are often provided as a package to merchants, Visa’s conduct also affected Morgan Stanley’s participation in the broader financial network.
Morgan Stanley owned Discover during the time in question, although they are now separate firms. Discover did not and does not presently compete with Visa in the European market. The Commission believes that it is highly unlikely that Discover will ever enter into the European market, as doing so successfully is probably only possible with a substantial investment at a time when a credit system is in its infancy. Because the international credit market is highly concentrated, Visa’s exclusion of Morgan Stanley may stifled Morgan Stanley’s ability to compete with Visa in the US market.
The Commission is charged with enforcing many of the European Union’s Treaties, including a ban on restrictive business practices. Visa’s refusal to admit Morgan Stanley was found to be both unjustified and discriminatory.
The Commission rejected Visa’s major arguments. First, it held that even if the market gained any efficiencies by excluding Morgan Stanley, which was not proven, such potential efficiencies would not justify the cost of losing market innovations, nor reducing in the amount of services available to consumers and merchants.
Visa also argued that Morgan Stanley was excluded in part because of the need to protect confidential information. The Commission ruled that Visa failed to supply evidence which demonstrated such a risk that Morgan Stanley even would gain access to confidential information. It also ruled that any potential loss to confidentiality could have been mitigated by less severe means.
Finally, the Commission held that although there is a long-standing rule permitting market participants to exclude competitors from their system under most conditions, but that Visa’s anticompetitive behavior was unlawful because of the discriminatory application. Visa had previously admitted firms that competed with Visa other markets, such as Citigroup (Diners’ Club).
Discover is now a member of Visa’s European network.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: eu competition law, eu law, european antitrust lawsuits
posted by European Antitrust Law at
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