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The step was taken in relation to its multilateral interchange fees (MIF) for cross-border point of sale transactions within the EEA using Visa branded consumer payment cards, and the "Honour-All-Cards-Rule" as it applies to these transactions.

The proceedings will seek to establish whether these practices constitute infringements of Article 81 of the EC Treaty and Article 53 of the EEA Agreement, which forbid restrictive business practices such as price fixing.

In Europe, there are nearly 321 million Visa debit, credit and commercial cards. In the 12 months ending September 2006, those cards were used to make purchases and cash withdrawals to the value of over €1.2 trillion.

For every €9 spent in Europe today, €1 is spent on a Visa card.

In-depth investigation 

This initiation of proceedings does not imply that the Commission has proof of an infringement. It only signifies that the Commission will conduct an in-depth investigation of the case as a matter of priority.

There is no strict deadline for the Commission to complete inquiries into anticompetitive conduct.

Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.

The proceedings concern the Visa network rules relating to the MIF for cross-border point of sale consumer payment card transactions within the EEA and, by default, for certain domestic point of sale consumer payment card transactions within the EEA, as well as the "Honour-All-Cards-Rule" as it applies to these transactions.

Substantial reforms

The MIF is a charge on each payment at a merchant outlet, retained by the customer's bank and charged to the merchant's bank, which then takes this cost element on board in setting its prices to merchants.

The "Honour-All-Cards-Rule" obliges merchants to accept all valid Visa-branded cards, irrespective of the identity of the issuer, the nature of the transaction and the type of card being issued.

In 2002, the Commission exempted the MIF proposed by Visa International after Visa International offered substantial reforms. The Commission cleared Visa's "Honour-All-Cards-Rule" in 2001.

In the proceedings leading to the Commission decision of 2002, Visa offered to progressively reduce the level of its MIF from an average of 1.1 per cent to 0.7 per cent until the end of 2007 and to cap the MIF at the level of costs for specific services.

Visa also enhanced the transparency of fees and allowed banks to reveal information about the MIF to businesses.

The exemption, however, expired on 31 December 2007 and Visa Europe Limited, which has taken over responsibility from Visa International for the network rules applicable in the EEA, has from that moment been responsible for ensuring that its system is in full compliance with EU competition rules.

Disproportionate shift in the cost of card payments 

A Visa Europe spokesperson said in December, after the European Commission's decision on Mastercard that the decision did not legally apply to Visa Europe’s interchange, and added that Commissioner Kroes had made clear that each case should be judged on its own merits.

“We see no evidence that Visa Europe’s interchange has acted as a tax on consumption or has caused consumers to pay twice.  The net result of a substantial reduction in interchange would see a disproportionate shift in the costs of the card payments system from retailers to consumers," he added.

Visa maintained that interchange ensured the effective operation of card payment systems and effectively enabled the replacement of "inefficient payments" like cash and cheques.

"Fees must be set at commercially viable levels, so that the industry can justify its continued investment in innovation, security and payment efficiency, as the Commissioner recognised. This will then assist in achieving the SEPA vision of an internal market in card payments,”  Visa concluded.

Decision on substance 

The legal base of this procedural step is Article 11(6) of Council Regulation No 1/2003 and Article 2(1) of Commission Regulation No 773/2004.

Article 11(6) of Council Regulation No 1/2003 provides that the initiation of proceedings relieves the competition authorities of the Member States of their authority to apply the competition rules laid down in Articles 81 and 82 of the EC Treaty.