Brussels, 14 April 2011
Antitrust: Commission welcomes Court judgment on Visa's appeal against decision in Morgan Stanley case
The European Commission welcomes today’s judgment by the General Court (case T-461/07) confirming a Commission decision of 2007, finding that Visa had infringed EU rules on restrictive business practices by refusing to admit, for six and a half years, Morgan Stanley Bank as a member to its payment card network without objective justification. In particular, the General Court confirmed that the entry of a new player, such as Morgan Stanley, would have created scope for further competition and that the essential factor on which such an assessment must be based is its ability to enter the market. The General Court also upheld the €10.2 million fine imposed on Visa. This judgment supports the Commission's determination to tackle market foreclosure, particularly in cases where an infringement prevented the entry of a new player who would otherwise have improved competition.
On 3 October 2007, the Commission adopted a decision finding that the exclusion of Morgan Stanley from Visa membership restricted competition in the provision of credit card acceptance services to merchants in the United Kingdom and fined Visa €10.2 million (see IP/07/1436).
In 2000, Morgan Stanley sought to become a member of the Visa organization, which Visa refused. The contested decision found that Morgan Stanley’s entry into the highly concentrated UK market could be reasonably expected to contribute to more efficient competition in the UK and have a positive effect on prices and the quality of acquiring services as Morgan Stanley had concrete plans and expertise to do so.
As a reason to prevent Morgan Stanley's membership, Visa invoked an internal rule according to which Visa would not accept as a member any applicant which is deemed by the board of directors to be a competitor. However, the Commission found that Morgan Stanley was not a competitor of Visa in the EU because it had no payment card network and - given the high entry barriers to the networks market - there was no realistic possibility that Discover, Morgan Stanley’s US card network, would expand to the EU.
Visa concluded a settlement agreement with Morgan Stanley in September 2006, admitting Morgan Stanley as a member. Subsequently, Morgan Stanley withdrew its complaint with the Commission. The Commission decided to impose a fine nevertheless as Morgan Stanley was excluded from the UK acquiring market for six and a half years – including more than 2 years after the Commission had sent a Statement of Objections to Visa.
The General Court judgment
Visa brought an action against the Commission before the General Court on 19 October 2007. According to Visa, Morgan Stanley was not prevented from entering the UK acquiring market and, even if it were, Visa's refusal to accept Morgan Stanley as member did not produce sufficient anti-competitive effects. Moreover, Visa claimed that no fine should have been imposed and that in any event the amount of the fine was disproportionate.
The General Court rejected Visa's claims and upheld the Commission's findings of an infringement and the fine against Visa. In particular, the Court rejected Visa's argument that the Commission had underestimated the degree of competition actually existing in the market. In line with the Commission's position, the Court held that an assessment of the conditions of competition in a given market has to be based not only on the existing competition between undertakings already present in the market in question, but also on potential competition from new entrants. The Court took the view that the Commission could justifiably consider that the entry of a new player would have created scope for further competition in the UK acquiring market. Lastly, according to the Court, the essential factor on which the assessment of a potential competitor must be based is the ability of a potential competitor to enter the market. In the case of Morgan Stanley, this ability to enter the market had not been challenged and was not merely theoretical.
This judgment confirms that an association of banks cannot unjustifiably exclude another bank which could potentially bring further competition on the market.