Interac Association

Backgrounder

December 05, 2002

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The Competition Bureau began its examination into the operation of the Interac Association in May 1990, followed by an inquiry in July 1992. The essence of the inquiry was the allegation that the charter members of the Interac Association, as a matter of joint dominance, engaged in three broad categories of anti-competitive acts, namely restricting access to the network, creating barriers to product innovation, and controlling access and service pricing. The Bureau filed an application with the Competition Tribunal on December 14, 1995, for the issuance of a Consent Order by the Tribunal pursuant to sections 79 (abuse of dominant position) and 105 (consent orders) of the Competition Act.

On June 20, 1996, the Tribunal issued a Consent Order against Interac Inc. and the nine charter members of the Interac Association (collectively, the respondents). This required the respondents to expand representation on the Association Board and change its rules so as to liberalize access to the network, as well as eliminate constraints on product innovation and price competition. The purpose of the Consent Order was to open access to the network to create an environment that was conducive to the introduction of new services. The Consent Order encouraged competition in this rapidly growing and important industry.

Variation to Consent Order of March 25, 1998

The sole purpose of this Amended Consent Order was to specifically allow the Board of the Interac Association the ability to impose a performance sanctions policy with monetary penalties upon members who failed to meet the performance policy. This amendment was directed only to this specific issue. The Bureau consented to the amendment as it was without competitive significance and was not discriminatory.

Variation to Consent Order of September 8, 2000

This amendment allowed the Board of the Interac Association to develop general policies for imposing monetary penalties on members that fail to comply with the Association's rules provided the policies meet the rational business objectives of the Association and do not discriminate. It applied to all members and had no competitive significance. The ability to impose monetary penalties upon non-compliant members is consistent with policies and practices of other major North American networks.

Legislative Changes Expanding Access to the Payments System

After the Competition Tribunal issued the Consent Order in 1996, the Competition Bureau advocated legislative changes that would expand access to the payments system. For example, in its Submission to the Task Force on the Future of the Canadian Financial Services Sector, the Bureau argued that limiting access to the payments system placed certain institutions at a competitive disadvantage in the marketing of a growing array of services. The Bureau's experience in obtaining the original Consent Order highlighted the importance of access to the payments system as a strategic factor affecting competition throughout the financial sector.