Director Seeks Consent Order From Competition Tribunal in Interac

OTTAWA, December 14, 1995 — George N. Addy, Director of Investigation and Research under the Competition Act, filed an Application for a Consent Order today with the Competition Tribunal against Interac Inc. and Canada’s major financial institutions, which are the Charter members of the Interac Association (Interac). This application is made under sections 79 and 105 of the Act and alleges abuses of a "joint dominant position".

This Application is the result of a lengthy investigation by the Director and extensive discussions between the Director and Interac. "Electronic networks used for financial service transactions are a vital part of the Canadian economy. The Consent Order will ensure that shared electronic networks are, to the fullest extent possible, competitive. Consumers want the benefits of a competitive environment to ensure the widest variety of services and lowest prices possible," Mr. Addy said. "Consumers and other users of these systems also want to make sure that the high level of network security and integrity that exists today will be preserved. I believe the Consent Order meets both these objectives."

The Application alleges that Interac’s Charter members created the dominant shared electronic services network in Canada and abused their market power in several ways:

• they put in place a structure and membership criteria that discriminate against non-financial institutions, including third-party processors and retailers, and against non-Charter members;
• they have imposed excessively high fees for new members wanting to join Interac;
• they have unnecessarily limited the services that can be provided over the Interac network thereby depriving consumers of the benefits of innovation.

As a result, competition has been lessened substantially in the Canadian market.

The Charter members of Interac are consenting to the Director’s request for an Order which will require that membership in Interac be opened on a non-discriminatory basis and that members are prohibited from engaging in specified anti-competitive acts.

Interac currently provides a shared cash dispensing service whereby cards issued by one member of Interac can be used to obtain cash from an automated banking machine (ABM) owned by another Interac member. Interac also provides an electronic funds transfer at the point-of-sale service (Interac Direct Payment) which allows consumers to make purchases at participating retail outlets using Interac trademarked debit cards.

The financial institutions and parties that are subject to the Application and have consented to the Order filed are:

• Bank of Montreal,
• The Bank of Nova Scotia,
• Canada Trustco Mortgage Company,
• Canadian Imperial Bank of Commerce,
• La Confédération des Caisses Populaires et d'Économie Desjardins du Québec,
• Credit Union Central of Canada,
• National Bank of Canada,
• Royal Bank of Canada,
• The Toronto-Dominion Bank,
• Interac Inc.

The Application and draft Consent Order are on the public record and available from the Competition Tribunal.