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Brussels, 26 March 2008

Antitrust: Commission initiates formal proceedings against Visa Europe Limited

The European Commission has decided to open formal antitrust proceedings against Visa Europe Limited in relation to its multilateral interchange fees (MIF) for cross-border point of sale transactions within the EEA using Visa branded consumer payment cards, and the "Honour-All-Cards-Rule" as it applies to these transactions. The proceedings will seek to establish whether these practices constitute infringements of Article 81 of the EC Treaty and Article 53 of the EEA Agreement, which forbid restrictive business practices such as price fixing.

This initiation of proceedings does not imply that the Commission has proof of an infringement. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority.

There is no strict deadline for the Commission to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.

What is the decision of the Commission to initiate proceedings about?

The proceedings concern the Visa network rules relating to the MIF for cross-border point of sale consumer payment card transactions within the EEA and, by default, for certain domestic point of sale consumer payment card transactions within the EEA, as well as the "Honour-All-Cards-Rule" as it applies to these transactions. The MIF is a charge on each payment at a merchant outlet, retained by the customer's bank (the "issuing bank") and charged to the merchant's bank (the "acquiring bank"), which then takes this cost element on board in setting its prices to merchants. The "Honour-All-Cards-Rule" obliges merchants to accept all valid Visa-branded cards, irrespective of the identity of the issuer, the nature of the transaction and the type of card being issued

In 2002, the Commission exempted the MIF proposed by Visa International (see IP/02/1138) after Visa International offered substantial reforms. The Commission cleared Visa's "Honour-All-Cards-Rule" in 2001 (see IP/01/1198). In the proceedings leading to the Commission decision of 2002, Visa offered to progressively reduce the level of its MIF from an average of 1.1% to 0.7% until the end of 2007 and to cap the MIF at the level of costs for specific services. Visa also enhanced the transparency of fees and allowed banks to reveal information about the MIF to businesses. The exemption, however, expired on 31 December 2007 and Visa Europe Limited, which has taken over responsibility from Visa International for the network rules applicable in the EEA, has from that moment been responsible for ensuring that its system is in full compliance with EU competition rules.

What is the legal base for the decision opening proceedings?

The legal base of this procedural step is Article 11(6) of Council Regulation No 1/2003 and Article 2(1) of Commission Regulation No 773/2004.

Article 11(6) of Council Regulation No 1/2003 provides that the initiation of proceedings relieves the competition authorities of the Member States of their authority to apply the competition rules laid down in Articles 81 and 82 of the EC Treaty. Moreover, Article 16(1) of the same Regulation provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.

Article 2(1) of Commission Regulation No 773/2004 provides that the Commission can initiate proceedings with a view to adopting, at a later stage, a decision on substance according to Articles 7-10 of Council Regulation No 1/2003 at any point in time, but at the latest when issuing a statement of objections or a preliminary assessment notice in a settlement procedure. In the case at stake, the Commission has chosen to open proceedings before any such further steps.

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