SCHEDULE "A" THE COMPETITION TRIBUNAL CT-95/02
IN THE MAT IER OF an application by the Director of Investigation and Research under sections 79 and 105 of the Competition Act, R.S.C. 1985, c.C-34, as amended;
AND IN THE MATTER OF an abuse of dominant position in the supply of shared electronic network services for consumer-initiated shared electronic financial services;
AND IN THE MAT IER OF a Consent Order granted by the Competition Tribunal dated June 20, 1996;
AND IN THE MATTER OF an application by Bank of Montreal, et al. , under sections 105 and 106(b) of the Competition Act, R.S.C. 1985, c.C-34, as amended, to vary the Consent Order granted by the Competition Tribunal dat ___c _n--M-P-t:·.,-r:r-1'.'-,ii-i·-r--~1-ii:~~t June 20, 1996. BETWEEN: Bank of Montreal The Bank of Nova Scotia Canada Trustco Mortgage Company Canadian Imperial Bank of Commerce La Confederation des caisses populaires et d'economie Desjardins du Quebec Credit Union Central of Canada National Bank of Canada Royal Bank of Canada The Toronto-Dominion Bank lnterac Inc.
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The Director of Investigation and Research Respondent STATEMENT OF GROUNDS AND MATERIAL FACTS
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Applicants
- 2 -I. STATEMENT OF GROUNDS 1. The requested variation has no negative effect on competition in any relevant market identified in the original Statement of Grounds and Material Facts filed December 14, 1995 (the "Original Grounds").
2. The requested variation benefits consumers and merchants by permitting the Board of the Interac Association to create a performance sanctions policy which will likely lead to better performance in the Shared Services.
Il. MATERIAL FACTS 3. The Applicants allege the following material facts as the basis for this Application. The Director does not contest these facts for the purposes of this Application and for any proceeding relating to the Consent Order, as varied by this Application.
A. THE PARTIES 4. The parties are described in paragraphs 2 through 7 of the Original Grounds. Subject to paragraph 5, this description remains correct.
5. The IMN software is now owned by Acxsys Corporation ("Acxsys"), an affiliate of Interac Inc. Acxsys and Interac Inc. share common shareholders. Acxsys has granted Interac Inc. master license for the IMN for shared electronic financial services in Canada. Interac Inc. in turn sub-licenses members of the Interac Association for use of the IMN in connection with any Service in the Association.
- 3 -B. THE INTERAC ASSOCIATION 6. The Interac Association has been reorganized to comply with the Consent Order. It has an Amended and Restated Memorandum of Association dated November 5, 1996 (the "Amended Memorandum") which covers: the Association's objects; its members; meetings of members; its board of directors; the term of the agreement; and its dissolution.
7. The new Association board constituted under the Amended Memorandum enacted a new By-law Number 1, a general by-law which establishes procedures for the decision-making processes relating to the operations and affairs of the Association. By-law Number 1 deals with, inter alia: Member eligibility and performance; the qualifications, appointment and power of directors; duties of officers of the Association; and performance of Services.
8. Both the Amended Memorandum and By-law Number 1 authorize the Board of the Association to enact policies which are not inconsistent with either document.
c. THE SHARED SERVICES 9. The Association continues to offer two Shared Services: Shared Cash Dispensing ("SCD") and Interac Direct Payment ("IDP"). Currently, there are no Bilateral/Multilateral Services offered under the auspices of the Association.
D. THE NEED FOR A PERFORMANCE SANCTIONS POLICY 10. The material facts on this point are set out in the Affidavit of Fred J. Harris which accompanies this Application.
- 4 -ill. RELIEF SOUGHT 11. The Applicants request that the Consent Order be varied in accordance with the terms of the Draft Consent Variation Order, attached to the Notice of Application as Schedule "B".
DATED at Toronto, Ontario this/c~ay of February, 1998. 10576681.01