The European Commission has fined Visa E10.2 million for refusing to let Morgan Stanley become a member of its credit card payment network in the UK.
The commission opened an investigation following a complaint submitted by Morgan Stanley in 2000. In 1999, Morgan Stanley incorporated Morgan Stanley Bank in the UK and in 2000, Morgan Stanley Bank sought to become a member of the Visa organisation, which Visa refused.
At the time of the infringement, Morgan Stanley owned the Discover card network in the US. However, Discover was not present on the EU market. Until Visa finally admitted Morgan Stanley Bank as a member in September 2006, Morgan Stanley’s EU card operations were confined to issuing MasterCard cards in the UK.
The commission’s investigation revealed that retailers expect banks to offer card acceptance contracts as a package, including both Visa and MasterCard. Therefore, Visa’s refusal to admit Morgan Stanley as a member not only prevented Morgan Stanley from providing services to merchants in the form of Visa transactions (which represent about 60% of the market), but also as regards other payment cards transactions.
In August 2004, the commission sent Visa a statement of objections, setting out the findings of its investigation. Subsequently, Visa concluded a settlement agreement with Morgan Stanley in September 2006 and admitted the bank as a Visa member. Consequently, Morgan Stanley withdrew its complaint.
However, while the complaint was withdrawn and the infringement ceased, the commission decided to impose a fine as Morgan Stanley was excluded from the UK acquiring market for six and a half years – including more than two years after the commission had sent Visa a statement of objections.