Tuesday, 19 July 2016

Former fintech owner takes on Visa

In September 2015, the Federal Court ordered Visa Worldwide Pte Ltd (Visa) to pay a pecuniary penalty of $18 million for engaging in anti-competitive conduct.

Visa’s exposure from this finding may extend beyond this penalty, as commercial entities allegedly affected by this conduct also take up arms against the global payments technology company.

The Federal Court ruling
Visa makes significant profit from the point of sale currency conversion from international travellers using their Visa cards.  In competition to this service, rival suppliers offer dynamic currency conversion which gives a cardholder a choice to complete the transaction in their home currency at a locked-in exchange rate. 

Between May to October 2010, Visa prohibited the further expansion of dynamic currency conversion on point of sale transactions on the Visa payment card network by its rival suppliers.  The effect of this moratorium meant that retail stores, hotels and restaurants could not introduce dynamic currency conversion.

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Visa in relation to the dynamic currency conversion ban.  The Federal Court held the conduct to be exclusive dealing contrary to section 47 of the Competition and Consumer Act 2010 (Cth).  

A link to the ACCC media release on the Federal Court ruling can be found here.  

Claim by Daniel Lavecky
Daniel Lavecky, the founder of Pure Commerce, a dynamic currency conversion services provider, has recently commenced proceedings against Visa on the back of the Federal Court finding.  

Mr Lavecky sold Pure Commerce to Euronet Worldwide Inc. in January 2013, but claims that he lost out on two higher offers from prospective buyers in 2010 due to the ban imposed by Visa.  

He claims that he would have sold Pure Commerce for more had it not been for Visa acting anti-competitively. 

Mr Lavecky has only recently commenced the proceedings and it will be interesting to see how Visa responds to the allegations.

It would appear though that Mr Lavecky’s case is a good example of how a plaintiff can let a regulator do the heavy lifting (i.e. proving that conduct was anti-competitive) before then commencing civil proceedings.  

In this regard it also appears that Mr Lavecky got lucky, in that the ACCC’s proceedings concluded within the six-year limitation period for Mr Lavecky’s action.  (Section 82 of the Competition and Consumer Act 2010 (Cth) imposes a six-year time limitation to commence any action, and it is likely that Mr Lavecky will seek relief pursuant to that section by relying on infringing conduct by Visa between May to October 2010). 

The team at McR Collared will be keeping a close eye on this matter and will be providing updates as it progresses. 

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