Senator Pierrette Ringuette

Credit-card probe has begun, says watchdog; Bureau investigating competition law issues

On the first day of long-awaited Senate hearings into Canada's controversial credit- and debit-card system, a federal watchdog agency revealed it's already probing the industry for possible violations of the Competition Act.

The Competition Bureau said yesterday it is investigating whether the industry has breached the "abuse of dominance" provisions in the act, specifically in regard to the "interchange fees" set by credit-card companies.

The bureau has been receiving a growing number of complaints from merchants, small business and independent grocers about the fees they pay to accept credit card payments from customers, deputy commissioner of civil matters Richard Taylor told the Senate hearings in Ottawa.

"I can confirm that specifically with respect to interchange fees we are looking at whether there may have been a contravention of Section 79 of the act ... which prevents dominant firms from engaging in practices that are having, or are likely to have, the impact of substantially lessening competition in the market," Taylor said.

The Retail Council of Canada applauded the move.

Visa Canada was unable to comment, while MasterCard Canada spokesperson Julie Wilson said in response to an email: "We are confident that any investigation will demonstrate MasterCard's compliance with all laws and demonstrate the vigorous competitive environment in which we operate."

Both companies have maintained the credit-card industry in Canada is highly competitive.

The two largest credit-card companies, Visa and MasterCard, control 94 per cent of the Canadian market, the committee heard early on from a finance department official.

Noting that Canada's credit-card market is valued at $370 billion, Taylor said the bureau "does not take such markets lightly."

"Canada is not the only jurisdiction looking at whether the way interchange fees are set is in violation of competition laws," Taylor added, noting that similar investigations are underway in the United Kingdom and Australia.

"If we find there has been a breach of the act, we will act."

Liberal Senator Pierrette Ringuette, who is calling for closer government regulation of Canada's payments industry, said she was happy to hear the bureau is investigating, but interchange fees are only part of the problem.

The wide-ranging Senate hearings continue today.