Partner and co-chair of Torys’ Competition and Foreign Investment Review Practice Dany Assaf and associate Rebecca Moskowitz recently co-authored an article for the Spring 2015 edition of the American Bar Association journal, Antitrust. Dany and Rebecca provide a comprehensive overview of the various competing issues involved in conflicts between merchants and credit card networks. Below is an excerpt of the article.
In modern economies, credit card networks, issuers, and acquirers play significant roles as such market facilitators. Their role is primarily to make consumer payment—the critical component of any transaction—more convenient, expand consumer purchasing power by extending credit, and virtually eliminate credit risk as between merchants and consumers. The result is an economy that is larger and a marketplace that is more efficient than it otherwise would be.
Recently, however, merchants worldwide have challenged aspects of their relationship with these facilitators alleging that some of the fees and rules relating to their respective services are unfair and do not reflect the real value to merchants. The stakes are high: by one estimate, Visa, American Express, MasterCard, and Discover facilitated roughly $2.399 trillion in credit and charge card spending in 2013. Consequently, competition authorities, governments, courts, and tribunals around the world, from the United States to South Korea, are grappling with how best to balance the essential market-facilitating role of each player with necessary protections to ensure that the credit card industry functions competitively.
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