EC fines Visa EUR10.2m for Morgan Stanley exclusion

EC fines Visa EUR10.2m for Morgan Stanley exclusion

The European Commission has fined Visa EUR10.2 million for refusing to let Morgan Stanley access its credit card payment network in the UK.

The antitrust dispute originally broke out in 2000 when Visa denied Morgan Stanley access to its card network in Europe on grounds that the investment bank runs the Discover card network in the US in direct competition with Visa.

Morgan Stanley filed a compliant to the European Commission, which opened an investigation and eventually charged Visa with a breach of competition rules in August 2004. The credit card firm appealed the ruling and has since been waiting for this latest decision.

The two firms settled the dispute in November 2006 when Visa allowed Morgan Stanley to become a member of its card network. The bank then withdrew its compliant against the card network.

But although the complaint was withdrawn and the infringement ceased, the EC says it decided to impose a fine as Morgan Stanley was excluded from the UK acquiring market for six and a half years.

"The Commission found 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," says the EC statement.

Until Visa finally admitted Morgan Stanley as a member in September 2006, the bank was confined to issuing MasterCard cards in the UK. This made the services less attractive to retailers, which expect banks to offer card acceptance contracts as a package including both Visa and MasterCard, says the EC.

Visa's behaviour was found to have prevented Morgan Stanley from providing services to merchants as regards Visa transactions (which represent about 60% of the market), but also as regards other payment cards transactions.

EC competition commissioner, Neelie Kroes, says: "The payment cards industry plays a key role in the creation and functioning of the single market for payments. The Commission will not tolerate anticompetitive behaviour and will intervene if companies are illegally refused membership of payment card networks."

In a statement Visa Europe's president and chief executive Peter Ayliffe criticised the Commission for pursuing the case even after Morgan Stanley had withdrawn its complaint. He says Visa will appeal the latest decision.

"Visa Europe believes that if the Commission is truly committed to competition in European payments it would be better prioritising its resources on the unresolved interchange issue which threatens to curtail the growth of electronic payments to the detriment of all of Europe's businesses and consumers," says Ayliffe.

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