CT-2010-010 THE COMPETITION TRIBUNAL IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; AND IN THE MATTER OF an application by the Commissioner of Competition pursuant to section 76 of the Competition Act;
AND IN THE MATTER OF certain agreements or arrangements implemented or enforced by Visa Canada Corporation and MasterCard International Incorporated.
BETWEEN: THE COMMISSIONER OF COMPETITION Applicant - and -VISA CANADA CORPORATION AND MASTERCARD INTERNATIONAL INCORPORATED
Respondents
RESPONSE OF THE COMMISSIONER OF COMPETITION TO THE REQUESTS FOR LEAV E TO INTERVENE FILED BY THE CANADIAN BANKERS ASSOCIATION AND THE TORONTO-DOMINION BANK
1. This Response by the Commissioner of Competition (the "Commissioner") is filed pursuant to rule 44(1) of the Competition Tribunal Rules (the "Rules") in response to the requests of the Canadian Bankers Association (the "Bankers Association") and The Toronto-Dominion
- 2 -Bank ("TD Bank", and together with the Bankers Association, the "Proposed Intervenors") for leave to intervene in this proceeding. 1 2. The Commissioner denies each of the allegations in the requests for leave to intervene filed by TD Bank and the Bankers Association, except as expressly admitted herein.
I. OVERVIEW 3. The Commissioner submits that the requests for leave to intervene should be denied. This is so for a number of reasons, including that the Proposed Intervenors have failed to establish that they are directly affected by the Application and that they have a unique or distinct perspective that will be of assistance to the Tribunal's resolution of the disputed issues in the Application. 4. In arguing that they are "directly affected", each of the Proposed Intervenors relies upon speculation and unsupported "predictions" regarding the potential impact of the Application on consumers and merchants, and indirectly on itself (in the case of TD Bank), on its members (in the case of the Bankers Association) and on the "Canadian payments system". Such speculative and hypothetical impacts are insufficient to satisfy the "directly affected" requirement that must be met before leave to intervene can be granted. To satisfy this requirement, a proposed intervenor must provide evidence establishing that the proceedings will have a definite and concrete effect on the proposed intervenor in a manner which relates to competition.
Unless otherwise indicated, defined terms herein have the respective meanings ascribed to them in the Notice of Application and Statement of Grounds and Material Facts filed by the Commissioner (the "Application").
- 3 -5. There is likewise no merit to TD Bank's position that the Application makes "serious allegations of anticompetitive conduct" against it and other Acquirers, or that TD Bank should be granted intervenor status to "defend itself". It is clear that the Application contains no allegations of anti-competitive conduct against Acquirers in general, or against TD Bank in particular - indeed, TD Bank is not referred to anywhere in the Commissioner's Application or in her Reply. Nor is any remedy sought against TD Bank. 6. The substantive issues before the Tribunal in this proceeding will be contested vigorously by the existing parties. Any representations the Proposed Intervenors might make would not go beyond or add anything unique to or distinct from the submissions that will be made or the evidence that will be adduced by the parties to the Application. Indeed, it is clear from their respective leave materials that the Proposed Intervenors' positions and "perspectives" on the disputed issues are indistinguishable from the positions and perspectives of the Respondents, and that like the Respondents, the Proposed Intervenors have and are motivated by a naked pecuniary interest in preserving the status quo. 7. In the circumstances, there is no basis upon which the Bankers Association or TD Bank can properly be granted leave to intervene in this Application: parroting the position of one or more of the parties throughout the course of a proceeding is not the role or value of intervenors in proceedings before the Tribunal. 8. In the alternative, should the Tribunal determine that granting intervenor status is appropriate (which is denied), the Commissioner submits that the Bankers Association alone should be given leave to intervene. TD Bank is a member of the Bankers Association and the Bankers Association purports to bring the alleged "multiple perspectives" of all of its member
- 4 -banks, including TD Bank, to the Tribunal. Also, as discussed in detail below, the Bankers Association and TD Bank propose to make essentially identical representations to the Tribunal. Needless duplication would be wasteful and burdensome, and would be entirely inconsistent with the mandatory requirements imposed by section 9(2) of the Competition Tribunal Act to conduct proceedings informally and expeditiously. 9. Further, with respect to the substantive scope of any intervention that may be allowed, the Commissioner submits that any intervention should be confined (at its very broadest) to the issue of the appropriate remedy to be granted in the event that the Tribunal concludes that the elements of section 7 6 have been satisfied. It is apparent from their leave materials that the principal issues the Proposed Intervenors seek to address relate to the alleged potential financial consequences to the banks and to unidentified potential consequences for the "Canadian payments system" associated with removing or modifying the Merchant Restraints. While the Commissioner submits that these issues are not legitimately within the scope of the Tribunal's consideration on this Application, it is clear that the Proposed Intervenors certainly do not have any "unique" or "distinct" perspective in respect of any of the various legal and factual issues bearing on whether the Respondents have engaged in conduct that is reviewable under section 76 of the Act. 10. Finally, with respect to the procedural scope of any intervention that may be allowed, the Commissioner submits that any intervention should be limited to attending motions, pre-hearing conferences and the hearing of the Application, and making submissions at same, but only to the extent that those submissions are not duplicative of those of the Respondents. Limiting the Proposed Intervenors' participation in this way is appropriate, having regard to their identity of position and pecuniary interest with the Respondents and the fact that neither Proposed Intervenor has demonstrated that the enhanced level of participation they have requested
- 5 -(including the right to adduce viva voce evidence, cross-examine and file expert evidence) is necessary as a matter of fairness, much less fundamental justice, for them to participate effectively and meaningfully in these proceedings. 11. In the alternative, as in prior cases and consistent with the mandatory direction that the Tribunal's proceedings be conducted, as set out in section 9(2) of the Competition Tribunal Act, as informally and expeditiously as the circumstances and considerations of fairness permit, the Tribunal should implement safeguards (as proposed by the Commissioner below) to prevent the Proposed Intervenors from making submissions or introducing evidence that is duplicative of the argument and evidence of the parties, thereby preventing the undue and unnecessary lengthening and complication of this proceeding. 12. Further, if either or both of the Proposed Intervenors is granted leave to intervene, the Tribunal should order documentary and oral discovery of the Bankers Association and/or TD Bank, as applicable, by the Commissioner. Such discovery would be essential to enable the Commissioner to properly prepare her case for hearing, to prevent surprise and minimize duplication at the hearing, and, ultimately, to permit this case to proceed on an expeditious and efficient basis.
II. THE TEST FOR LEAV E TO INTERVENE 13. The Tribunal's authority for granting intervenor status to a non-party is provided for in section 9(3) of the Competition Tribunal Act: "Any person may, with leave of the Tribunal, intervene in any proceedings before the Tribunal, other than proceedings under Part VII.I of the Competition Act, to make representations relevant to those proceedings in respect of any matter that affects that person".
- 6 -14. In this regard, rule 46(2) of the Rules provides as follows: "The Tribunal may allow a motion for leave to intervene, with or without conditions, or refuse the motion".
15. In exercising its discretion to grant leave to intervene, the Tribunal must determine that the person seeking leave to intervene has satisfied each of the following requirements: (a) the person seeking leave to intervene must be "directly affected" by the proceeding in question;
(b) the matter alleged to affect the person seeking leave to intervene must be legitimately within the scope of the Tribunal's consideration or sufficiently relevant to the Tribunal's mandate under the Competition Act;
( c) all representations proposed to be made by the person seeking leave to intervene must be relevant to an issue specifically raised in the parties' pleadings; and
(d) the person seeking leave to intervene must bring a unique or distinct perspective, separate and apart from that provided by the parties, that will assist the Tribunal in deciding the issues before it. 2 16. The onus is on the person seeking leave to intervene to demonstrate that each of the requirements outlined above has been satisfied. These requirements are cumulative in nature, with the result that a request for leave to intervene can and should be rejected if even one of these requirements is not met. 17. Moreover, in applying this multi-part test for leave, the Tribunal will carefully consider the extent to which a proposed intervention may prolong or complicate the proceeding before it. 3 This level of scrutiny is required by section 9(2) of the Competition Tribunal Act, which states expressly that:
See Canada (Commissioner of Competition) v. Canadian Real Estate Assn., [2010] C.C.T.D. No. 11 at para. 12 (Comp. Trib.) (QL) ("CREA").
See Director of Investigation and Research v. Air Canada et al. (1992), 46 C.P .R. (3d) 184 at 187-88 (Comp. Trib.) ("Air Canada (1992)").
- 7 -"All proceedings before the Tribunal shall be dealt with as informally and expeditiously considerations of fairness permit".
18. The mandatory direction in section 9(2) concerning the conduct of Tribunal proceedings also bears directly on the extent to which a proposed intervenor should be permitted to participate in the event that the test for leave is found to have been satisfied. 19. The Commissioner submits that both of the Proposed Intervenors have failed to demonstrate: (a) that they are directly affected by the matters at issue in this Application; and (b) that they have a unique or distinct perspective that will be of assistance to the Tribunal's resolution of the disputed issues. Each of these requirements is discussed in turn below.
Ill. THE PROPOSED INTERVENORS ARE NOT DIRECTLY AFFECTED 20. A proposed intervenor cannot satisfy the "directly affected" requirement set out above by making speculative or hypothetical assertions concerning the potential impact on it of a proceeding before the Tribunal. Rather, a proposed intervenor must provide evidence demonstrating why and how it will be affected by the proceeding in a direct and definite manner which relates to competition. 4 In this regard, rule 43(2)(d) of the Rules requires a person applying for leave to intervene to provide a "concise statement of the competitive consequences arising from the matters referred to in paragraph (c) [i.e., the matters in issue claimed to affect the person] with respect to which that person wishes to make representations".
See, e.g., Burns Lake Native Development Corporation et al. v. C9mmissioner of Competition and West Fraser Timber Co. Ltd. et al., [2006) C.C.T.D. No. 16 at paras. 55, 61, 64-65, 69 and 81 (Comp. Trib.) (QL); Director of Investigation and Research v. Canadian Pacific Ltd. et al. (1997), 74 C.P.R. (3d) 37 at 43-44 (Comp. Trib.) ("Canadian Pacific (Leave Decision)"); Canada (Competition Act, Director of Investigation and Research) v. Washington, [1997] C.C.T.D. No. 2 at para. 3 (Comp. Trib.) (QL).
as the circumstances and
- 8 -(a) No Evidence Directly Affected in a Manner which Relates to Competition 21. In Burns Lake Native Development Corporation et al. v. Commissioner of Competition and West Fraser Timber Co. Ltd. et al., the Tribunal considered the meaning of the phrase "directly affected" for the purpose of section 106(2) of the Act. In that case, Justice Simpson concluded that to be "directly affected", an applicant must demonstrate a "definite and concrete" impact. Moreover, Her Honour recognized that the applicant must demonstrate that it is affected in a manner which relates to competition, as opposed to merely showing that it is affected at large: " ... a party that is directly affected by a consent agreement under subsection 106(2) of the Act is a third party who experiences first hand a significant impact on a right which relates to competition or on a serious interest which relates to competition. The impact must be definite and concrete (i.e. not speculative or hypothetical) and must be caused by the consent agreement and not by another agreement or obligation". 5 22. In arguing that they are "directly affected" by the Application, each of the Proposed Intervenors relies upon self-serving speculation and/or unsupported "predictions" regarding the potential impact of the Application on consumers and merchants and indirectly on itself (in the case of TD Bank), on its members (in the case of the Bankers Association) and on the "Canadian payments system". Neither of the Proposed Intervenors has adduced proper evidence, however, to establish that it is, in fact, directly affected in a definite and concrete manner which relates to competition. 23. There is, in particular, no evidence from the Bankers Association to establish why and how member banks of the Bankers Association are allegedly directly affected. Instead, the Burns Lake, supra at para. 55.
- 9 -Bankers Association offers only unsupported and conclusory assertions such as "[t]he [Bankers Association's] member banks are interested in this Application because they will be directly affected by the outcome. Any changes to the credit card system, including the respondents' [Merchant Restraints], which the Commissioner alleges are anti-competitive, would impact the [Bankers Association's] member banks and their credit card customers" and "[a]ny rule changes to this system would directly affect the [Bankers Association' s] member banks and their customers". 6 24. Similarly, TD Bank makes a number of highly speculative arguments regarding the alleged potential impact of the Application on itself and on the "Canadian payments system". 7 For example, paragraph 9 of the Sallas/van Duynhoven Affidavit filed on behalf of TD Bank states that "if merchants were specifically permitted to refuse certain TD credit cards, the cardholder customer might re-evaluate its/his/her banking relationship with TD due to the association of TD's brand with the denial of service in the mind of the cardholder". [emphasis added] Apart from the pure speculation of Messrs. Sallas and van Duynhoven, there is no basis for any claim that such a potential "re-evaluation" of the banking relationship between TD Bank and its customers is even a likely effect of granting the relief sought in the Application, much less that it will be a definite consequence thereof. 25. Further, and in any event, the fact that in the absence of the Merchant Restraints, customers might re-evaluate their banking relationships or that merchants might decline to accept
See Bankers Association Request for Leave to Intervene at paras. 3 and 9. See also Affidavit of Darren Hannah sworn February 10, 2011 ("Hannah Affidavit") at para. 3.
See, e.g., TD Bank Motion for Leave to Intervene at paras. 23-24. See also Affidavit Jim Sallas and Jeff van Duynhoven sworn February 9, 2011 ("Sallas/van Duynhoven Affidavit") at para. 9.
- 10 -TD credit cards (presumably on the basis that the Card Acceptance Fees associated with those cards are not set at acceptable levels) is not an "impact on a right which relates to competition or on a serious interest which relates to competition". TD Bank has not suggested that the removal or modification of the Merchant Restraints would impair in any way competition in the relevant market. As the Tribunal has made clear in prior decisions, the effectiveness of or potential financial losses to an individual competitor are not, in and of themselves, competition issues. 8 26. Preserving TD Banks' revenues from Card Acceptance Fees, or protecting its ability to leverage the supply of credit card services to secure additional banking business from customers, are not interests relating to competition that somehow justify the granting of intervenor status. To hold otherwise would require the Tribunal to grant intervenor status to every consumer, merchant or other person whose financial interests "might" be impacted by the Application.
(b) No Evidence Affected in a Manner Different from Large Segment of Public 27. The Tribunal has also held that a proposed intervenor must demonstrate that it is directly affected by the application in a manner that is different from how the application will impact upon all or a large segment of the public. In Air Canada (1992), the Tribunal rejected the request of the Council of Canadians for leave to intervene on this basis, observing that: "it is arguable that the decision on this application [to vary the Tribunal's consent order approving the merger of computer reservation systems of Air Canada and Canadian Airlines International Ltd.] will 'affect' indirectly a vast number of Canadians, at least all of those who travel by air. But it could not
See, e.g., Burns Lake, supra at para. 65 and Canadian Pacific (Leave Decision), supra at 45.
- 11 have been contemplated that the Tribunal is obliged to admit intervenors on such a scale". 9 28. The Tribunal also concluded in that case that it was not sufficient to satisfy the "directly affected" requirement that the persons represented by the Council of Canadians might be indirectly affected by "any consequences for Canadian ownership and Canadian protectionism that the application may have" or that "[t]he outcome [of the application] may offend or gratify the public policy views of the council and its members on Canadian sovereignty", matters which were not relevant to the issues raised by the application or the mandate of the Tribunal: "The Council of Canadians describes itself as 'a national organization, composed of approximately 25,000 Canadians, dedicated to the political, economic and cultural sovereignty of Canada'. This does not suggest that the Council represents persons who are, as members of the Council, affected by these proceedings other than in an indirect way having regard to any consequences for Canadian ownership and Canadian protectionism that this application may have. The outcome may offend or gratify the public policy views of the Council and its members on Canadian sovereignty, but I do not think the members of the Council can be said to be directly affected as such by the matters involved in this application" . 10 [emphasis added]
29. Like the Council of Canadians, the Proposed Intervenors have failed to adduce any evidence demonstrating that they are directly affected by the Application in a manner different from a vast number of Canadians. The Bankers Association offers no evidence in respect of this issue while, as already noted, TD Bank merely claims that the Application "might" indirectly affect its broader banking relationship with merchants and consumers if they, in turn, are impacted by the removal or modification of the Merchant Restraints.
Air Canada (1992), supra at 188. IO Air Canada (1992), supra at 188.
- 12 -30. Indeed, TD Bank asserts that it should be granted intervenor status to "address the perspective of ... the cardholder population and merchant population", and so that TD Bank "can inform and advise the Tribunal with respect to [the] perspectives [of merchants and cardholders] and the impact of these proceedings upon them". 11 However, TD Bank has failed to provide any evidence that would suggest, let alone demonstrate, that it is able to represent the views of Canadian consumers or merchants with respect to the matters at issue in the Application. 31. In any event, the Commissioner submits that evidence regarding the impact of the removal or modification of the Merchant Restraints, to the extent relevant, if at all, should be provided to the Tribunal directly through the testimony of those witnesses who claim to be impacted, as opposed to indirectly through the second-hand testimony or "advice" of a self-appointed spokesperson, such as TD Bank. 32. Also, like the Council of Canadians in Air Canada (1992) which had policy concerns relating to the potential implications of the application for Canadian ownership and sovereignty, the Proposed Intervenors' purported concerns regarding alleged (but unspecified) potential consequences of the Application for the "Canadian payments system" and, indirectly, themselves does not establish that either of the Proposed Intervenors is "directly affected" by the Application.
II See TD Bank Motion for Leave to Intervene at paras. 8 and 20(e) and Sallas/van Duynhoven Affidavit at paras. lO(a), 63(b) and 63(d). The Bankers Association also suggests in its Request for Leave to Intervene that it could make representations with respect to the perspectives of merchants and customers: see, e.g., para. 7 of Bankers Association Request for Leave to Intervene and para. 3 of the Hannah Affidavit.
- 13 -(c) No Allegations of Anti-Competitive Conduct Against TD Bank 33. At paragraphs 30 to 32 of its Motion for Leave to Intervene, TD Bank claims that the Application makes "serious allegations of anticompetitive conduct" against it and other Acquirers and asserts that on this basis it should be given leave to intervene to "defend itself'. There is no merit to TD Bank's position, and it should be rejected summarily. It is obvious that the Application contains no allegations of anti-competitive conduct against Acquirers in general, or against TD Bank in particular - indeed, TD Bank is not referred to anywhere in the Commissioner's Application or in her Reply. 34. Contrary to TD Bank's claim at paragraph 32 of its Motion for Leave to Intervene, the Commissioner has not sought any relief against TD Bank. Rather, the Application seeks to prevent Visa and MasterCard from implementing and continuing to enforce anti-competitive Merchant Restraints in their agreements with Acquirers, and to prevent Visa and MasterCard from requiring Acquirers to enforce the Merchant Restraints against merchants. As Visa admits at paragraph 32 of its Response: "Visa's Operating Regulations require Acquirers to obtain merchants' agreement to abide by the [Merchant Restraints] (among others) in their contracts". 35. In evaluating TD Bank's claims in this regard, it is telling that the Bankers Association, whose members include TD Bank as well as other financial institutions that directly or indirectly carry on an acquiring business, makes no similar claims in its Request for Leave to Intervene. 36. The Commissioner submits that the Proposed Intervenors have failed to meet their burden with respect to the first element of the test for leave to intervene, and that their motions should be dismissed on this basis alone.
- 14 -IV. NEITHER PROPOSED INTERVENOR CAN MAKE RELEVANT OR HELPFUL SUBMISSIONS OR HAS A UNIQUE OR DISTINCT PERSPECTIVE THAT WILL ASSIST THE TRIBUNAL
37. Even if the Bankers Association and/or TD Bank could somehow satisfy the requirement that they are "directly affected" by this Application (which is denied), the Commissioner submits that they should not be granted leave to intervene because they have both failed: (a) to establish that they have relevant and helpful submissions to make; and (b) to identify even a single relevant issue in respect of which they will offer a relevant perspective that will be "unique" or "distinct" from that of the Respondents.
(a) By the Bankers Association's Own Admission, the Proposed Intervenors Cannot Make Helpful or Relevant Submissions
38. With respect to the Proposed Intervenors' ability to make relevant and helpful submissions, the Bankers Association admitted in its May 2009 Submission to the Joint Meeting of the Standing Committee on Finance and the Standing Committee on Industry, Science and Technology, filed as part of its Request for Leave to Intervene, that it is "not able to provide substantive comments" in respect of a range of matters relating to the "payment card market in Canada" including (but not limited to) "the setting of interchange fees, the terms of merchantacquirer contracts and the 'honour all cards rule' . . . which the banking industry does not control" . 12 It follows from that admission that the Bankers Association (and its member, TD Bank) is also not "able to provide substantive comments" in this proceeding with respect to the No Surcharge Rule or related issues, including the nature and effects of the Merchant Restraints.
12 Submission of the Bankers Association to the Joint Meeting of the Standing Committee on Finance and the Standing Committee on Industry, Science and Technology ("Bankers Association Submission") at 1, Exhibit "B" to Hannah Affidavit.
- 15 -39. In the circumstances, the Commissioner submits that this admission 1s fatal to the Proposed Intervenors' requests for leave to intervene.
(b) Neither of the Proposed Intervenors has a Unique or Distinct Perspective 40. The Tribunal has repeatedly denied leave to intervene where a would-be intervenor's proposed representations will be made by an existing party to the proceeding or where the substance of those representations will be adequately considered by the Tribunal as a result of evidence tendered during the hearing or otherwise by the existing parties. 13 As discussed in greater detail below, the materials filed by the Proposed Intervenors make it clear that their positions and intended submissions will merely parrot those of the Respondents. 41. In Southam, Michael Delesalle, a long-time businessman with extensive retail experience and some exposure to publishing, had an "agreement in principle" to purchase an asset required to be divested pursuant to an Order of the Tribunal. Delesalle sought leave to intervene in a section 106 application brought by Southam Inc. and related companies (collectively, "Southam") to vary that Order. In rejecting Delesalle's request for leave to intervene, Justice Noel accepted the Director's submission that there was nothing that Delesalle would add to the proceedings beyond what Southam would have to put forward in order to succeed in its app Iic ation: "This application is indeed most unusual in that the interests of the intervenor and of Southam are entirely the same. Both will seek to establish that Mr. Delesalle's plans provide for an effective remedy and that the Tribunal which heard the original application
13 See, e.g., Southam Inc. v. The Director of Investigation and Research (l 997), 78 C.P.R. (3d) 315 at 319 (Comp. Trib.) ("Southam"); CREA, supra at para. 13; Washington v. Canada (Director of Investigation and Research) (1998), 78 C.P.R. (3d) 479 at 486 (Comp. Trib.); Air Canada (1992), supra at 189.
- 16 would not have made the order which it made if the current remedy had been before it at the time. I do not believe that the rules respecting intervention contemplate that an intervenor be called upon to make the very case that an applicant is called upon to make.
In this instance, Southam, as the applicant, bears the burden of proving every element necessary to support the variation application, failing which it will fail. It caimot delegate this task to someone else in whole or in part. Intervenors are intended to supplement the case of a party by bringing to the Tribunal their own and distinct perspective of the subject matter in dispute. Here nothing of the sort would be achieved by granting Mr. Delesalle intervenor status as Southam has already assumed the task of providing the Tribunal with Mr. Delesalle's contribution to the matter in issue". 14 [emphasis added]
42. More recently, m CREA, the Tribunal denied the motion for leave to intervene of Lawrence Dale on the same basis. Justice Simpson gave two reasons for concluding that the "unique or distinct perspective" requirement had not been satisfied. First, Her Honour rejected as insufficient Mr. Dale's bald assertion that "he has a different interest in and perspective on the case because he is a businessman in the private sector and the Commissioner is a public servant with a focus on the public interest". Second, Her Honour also observed that "Mr. Dale ... acknowledges that he is generally supportive of the Commissioner's case" and that he had "provid[ed] no examples of topics on which their positions differ". 15 43. The Tribunal applied a similar analysis in restricting the substantive scope of certain proposed interventions in Air Canada (1992): "However, it is not clear that [the proposed intervenors] can make any useful representations beyond those of the respondents with
14 Southam, supra at 319. 15 CREA, supra at para. 13.
- 17 respect to the question of whether the order should be granted: Gemini and the members of the Gemini partnership represented by the respondents can be relied upon, I think, to say everything that can be said for the continued existence of Gemini". 44. It is evident from the materials filed by the Proposed Intervenors that their perspective is "entirely the same" as the Respondents' and that they intend, just as Delesalle proposed to do in Southam, to make the "very case" - indeed, the very same submissions - that the Respondents intend to put forward. 17 Neither of the Proposed Intervenors has raised any matters that have not been, or cannot be, dealt with by the Respondents. By way of illustration only, it is respectfully submitted that the Tribunal should compare the submissions of the Respondents and the Proposed Intervenors on the following main points and issues identified by the Proposed Intervenors: (a) Relevant Product Market Visa: "Visa Canada denies that Visa credit cards do not compete with other forms of payment, including cash, cheques, debit cards, other card based payment products and various electronic PayPal . . . and all other payment cards including forms of payment, such as Pay Pal". 18 MasterCard: "Clearly, MasterCard does compete Bankers Association: "[The Respondents'] credit across a range of demand for transactions against cards compete with other network-branded credit all other forms of payment". 19 16 Air Canada (1992), supra at 189. 17 See Southam, supra at 319. 18 Visa Response at para. 52. See also para. 12 of the Visa Response. 19 MasterCard Response at para. 47. See also paras. 14, 15 and 42 to 46 of the MasterCard Response. 20 Sallas/van Duynhoven Affidavit at para. 36. 21 Bankers Association Request at para. 12 and Hannah Affidavit at para. 15.
16 TD Bank: "We view all other methods of payment as competitive alternatives to payment by a TD credit card. This includes cheques, cash, debit, private label store cards" . 20 cards, private label credit cards, retail gift cards, debit cards, cash, and cheques, as well as unregulated electronic payment services like PayPal". 21
- 18 -(b) The Merchant Restraints are pro-competitive Visa: "[The Merchant Restraints] are pro- Bankers Association: 11 ••• the credit card networks' consumer and pro-competi ' ti ' ve 11 . 2 2 rules are pro-competitive and are critical to the efficiency, integrity, and reliability of the respondents' MasterCard: "MasterCard's [Merchant credit card systems". 24 Restraints] . . . are designed to . . . promote competitiveness and efficiency" . 23 TD Bank: 11 ... the Visa Rules and the MasterCard Rules facilitate and promote the proper, efficient and effective operation of the credit card networks ... [the Merchant Restraints] are pro-competitive". 25 (c) Eliminating the Honour All Cards Rule would create a disincentive to carrying a credit card
Visa: "Cardholder uncertainty about whether TD Bank: " . . . cardholders will no longer be certain their Visa Card will be accepted ... is therefore a that their credit card will be accepted by a merchant. disincentive to carrying and using a Visa Card at . . . and may question the benefit and reliability of all" .26 carrying a credit card" . 28 MasterCard: "The consumer must have Bankers Association: "If cardholders cannot be sure confidence that her card will be accepted for that the card will be accepted . . . they will be less payment. This is its fundamental role. Without likely to obtain and use credit cards". 29 such confidence the consumer will not be inclined to make purchases using her MasterCard card. She will not be inclined to carry a MasterCard card at all". 27 22 Visa Response at para. 1. See also, e.g., para. 3 of the Visa Response and para. 8 of the Visa Concise Statement of Economic Theory.
23 MasterCard Response at para. 68. See also, e.g., paras. 3 and 96 of the MasterCard Response and para. 10 of the MasterCard Concise Statement of Economic Theory.
24 Bankers Association Request for Leave to Intervene at para. 12. See also paras. 13 and 15 of the Bankers Association Request for Leave to Intervene.
25 TD Bank Motion for Leave to Intervene at paras. 33(e) and 34. 26 Visa Response at para. 38. 27 MasterCard Response at para. 72. See also para. 59 of the MasterCard Response. 28 TD Bank Motion for Leave to Intervene at para. 23(a). 29 Bankers Association Request for Leave to Intervene at para. l 3(a).
- 19 -(d) Eliminating the No Surcharge Rule would result m a wealth transfer from consumers to merchants
Visa: " ... the likely result would simply be a Bankers Association: "It would simply cause a wealth transfer from cardholders to wealth transfer from consumers to merchants. In merchants" . 30 countries where surcharging is permitted ... [it] has simply caused a wealth transfer from consumers to MasterCard: " ... the merchant, when it has the merchants" . 32 opportunity to do so, may wish to surcharge
consumers making credit card payments, and TD thereby reap not only the benefits of credit card Commissioner with respect to the no-surcharge rule acceptance but a share of the consumers' benefit will, by definition, lead to increases in prices to for using that payment method". 31 cardholders" . (e) Section 76 oft he Act has no application Visa: "Section 76 simply has no application to the TD [Merchant Restraints] The [Merchant Commissioner's reliance upon Restraints] do not by agreement, threat, promise or other like means influence upward or discourage the reduction of the price at which another person form the legal basis for the remedies sought by the supplies, offers to supply or advertises a product" . 34 MasterCard: "The price maintenance provision of and MasterCard with respect to the inapplicability the Competition Act is simply inapplicable to these ofs. 76". facts" . 35 30 Visa Response at para. 4 7. 31 MasterCard Response at para. 66. See also paras. 75 and 76 of the MasterCard Response. 32 Bankers Association Request for Leave to Intervene at para. l 3(b) . 33 TD Bank Motion for Leave to Intervene at para. 33(d). Affidavit.
34 Visa Response at para. I. See also, e.g., paras. 6, 7 and 41to49 of the Visa Response. 35 MasterCard Response at para. 4. See also paras. 2, 82 to 90 and IOO(g) of the MasterCard Response and para. 9 of the MasterCard Concise Statement of Economic Theory.
Bank: " ... the relief requested by the 33 Bank: "TD takes issue with the s. 76 of the Competition Act. TD submits that s. 76 of the Competition Act has no application and cannot Commissioner, or for any other relief in this proceeding . . . TD supports the positions of Visa 36 Bankers Association: "The [Bankers Association] proposes to explain how the [Merchant Restraints] do not by agreement, threat, promise or any like means influence upward, or discourage the reduction of, the price at which another person supplies or offers to supply or advertise a product within the meaning of s. 76 of the Competition Act". 37 See also para. 32 of Sallas/van Duynhoven
- 20 -(f) The Merchant Restraints do not have any adverse effect on competition Visa: "In any event, the [Merchant Restraints] have not had, do not have and are not likely to have, an adverse effect on competition in a market". 38 MasterCard: " ... the Application wrongly asserts that [the Merchant Restraints] have an adverse effect on competition. In fact, [the Merchant Restraints] are designed to achieve efficiency and maxn ' ru • ze output. . . 11 . 3 9 (g) The Commissioner's Application is premature or unnecessary in light of, among other things, the Voluntary Code of Conduct
Visa: "The Canadian government has also looked extensively at the [Merchant Restraints]. In April 2010, the Government of Canada, through the Department of Finance . . . issued the [Voluntary consultation, the federal government decided not to Code of Conduct] ... [T]he Department of Finance concluded that it was unnecessary to address either Restraints]. The [Bankers Association's] members the [No Surcharge Rule] or [the Honour All Cards Rule] in the [Voluntary] Code of Conduct". 42
MasterCard: '"'[T]he fact that the [Voluntary the Voluntary Code of Conduct. In our opinion the Code of Conduct] was not fully in force when the Commissioner's Application is premature" . 45 Commissioner brought this Application, and indeed is not yet fully in force, is evidence that any Application in this regard is, amongst other things, significantly premature" . 43 36 TD Bank Motion for Leave to Intervene at paras. 33 and 34. 37 Bankers Association Request for Leave to Intervene at para. 15. See also Hannah Affidavit at para. 22. 38 Visa Response at para. 1. See also paras. 8 and 50 to 60 of the Visa Response. 39 MasterCard Response at para. 7. See also paras. 91 to 93 and 96 of the MasterCard Response. 40 TD Bank Motion for Leave to Intervene at para. 34. 41 Bankers Association Request for Leave to Intervene at para. 15. See also Hannah Affidavit at para. 22. 42 Visa Response at para. 65. 43 MasterCard Response at para. 98(h). 44 Hannah Affidavit at para. 23. 45 Sallas/van Duynhoven Affidavit at para. 56. See also TD Bank Motion for Leave to Intervene at para. 28.
TD Bank: "Far from having an adverse effect on competition, the [Merchant Restraints] are pro-competitive 11 40 • Bankers Association: "[T]he [Merchant Restraints do not have an adverse impact on competition in any market. Rather, the [Merchant Restraints] are pro-competitive and enhance economic efficiency". 41
Bankers Association: "As evidenced by the [Voluntary Code of Conduct] and the Payment Cards Networks Act, after careful study and broad eliminate or change the respondents' [Merchant have endorsed the [Voluntary Code of Conduct]". 44 TD Bank: "It is too early to judge the success of
- 21 -45. The absence of a unique perspective and the parroting of the Respondents' positions distinguishes this case from the decision of the Tribunal in The Director of Investigation and Research v. The D & B Companies of Canada Ltd., 46 relied on by the Bankers Association at paragraph 10 of its Request for Leave to Intervene. In stark contrast to the Proposed Intervenors in the instant matter, in D & B, the Canadian Council of Grocery Distributors ("CCGD") was not supporting either party to the application and was found by the Tribunal to have a perspective that differed from that of the parties. 47 46. TD Bank claims in its Motion for Leave to Intervene that the Respondents cannot provide the perspective of Issuers or Acquirers because the Respondents are not Issuers or Acquirers. 48 Nor, according to TD Bank, can the Respondents: (i) inform the Tribunal about "the competition that ... exist[s] for issuers", the "competitive business of attracting consumers to use a particular Issuer's credit card", or the importance to an Issuer of being able to cover the costs associated with providing the features and benefits offered with its credit cards, and the role played by Card Acceptance Fees in this respect; or (ii) "inform and advise the Tribunal drawing on direct experience in and with Canada's entire payment system". 49 The Commissioner denies that such information and experience is relevant to the Tribunal's determination of the disputed issues in this proceeding, and submits that the broad-ranging inquiry into what might be "good" for the
46 [1994] C.C.T.D. No. 19 (Comp. Trib.) (QL). 47 See D & B, supra at 2 (QL). Another feature which distinguishes D & B from the present matter is that in D & B the CCGD sought only limited intervention rights, namely the right to present legal submissions addressing the nature, scope and effect of the orders sought by the Director. This is in direct contrast to the expansive participatory rights requested by the Bankers Association (and TD Bank) on this motion.
48 See TD Bank Motion for Leave to Intervene at para. 7. 49 TD Bank Motion for Leave to Intervene at para. 29. See also, e.g., Sallas/van Duynhoven Affidavit at paras. 28 to 29 and 38.
- 22 -"Canadian payments system" upon which TD Bank is urging the Tribunal to embark would be entirely inappropriate. An inquiry of that nature goes far beyond the issues relevant to this Application and the Tribunal's mandate. Moreover, the position of TD Bank ignores the most basic principle that intervenors must take the case as they find it, and cannot expand the scope of the matters at issue in the proceedings in question. 47. In any event, even if such information and experience is somehow relevant (which the Commissioner denies), it is clear from the Responses of the Respondents that they purport to understand and be able to provide the perspective of Issuers and Acquirers in respect of the very issues identified by TD Bank. 5 ° For example, in its Response Visa states as follows: "Visa Canada must offer Issuers sufficient incentives to provide Visa Cards to consumers and encourage cardholders to decide to use them at the point-of-sale, and it must offer Acquirers sufficient incentives to negotiate with and enlist merchants who will accept Visa Cards". 51 "A payment system competes by attracting loyal cardholders through offering valuable benefits, and by delivering incremental sales to merchants who accept the payment card ... Accordingly, Visa Canada seeks to ensure that Issuers have sufficient incentives to enlist and service cardholders and Ac~uirers have sufficient incentives to enlist and service merchants". 5 • Interchange fees create incentives for Issuers to offer valuable cardholder benefits and other features (e.g., funding of an interest free period, statements, etc.) which allow the payment
50 See, e.g., paras. 26, 29 and 39 of the Visa Response; paras. 4 and 6 of the Visa Concise Statement of Economic Theory; paras. 29 and 73 of the MasterCard Response.
51 Visa Response at para. 26. 52 Visa Concise Statement of Economic Theory at para. 4.
- 23 system to build a base of loyal cardholders and thereby deliver incremental sales to merchants;
• Interchange fees cannot be raised too high, or else card acceptance will suffer. Similarly, interchange fees for a particular payment network cannot be too low, or else the network will not able to attract sufficient issuance and cardholder usage". 53 48. It is notable in considering TD Bank's position in regard to the foregoing, that TD Bank claims to be able to inform and advise the Tribunal with respect to the perspectives of merchants and cardholders and the impact of this Application upon them based on the assertion that TD Bank "has direct contact on a daily basis with both its cardholders customers and its merchant customers". 54 By the same logic (which the Commissioner rejects), TD Bank is compelled to admit that the Respondents, who have direct and presumably daily contact with Issuers and Acquirers, are equally able to inform and advise the Tribunal with respect to the perspectives of Issuers and Acquirers, and the impact of this proceeding upon them. 49. It is also clear that, contrary to the assertions of TD Bank, that the Respondents purport to have knowledge of and/or experience with Canada's entire "payments system". For instance, MasterCard's Response includes submissions with respect to "Payments in Canada" and "Payment Options in Canada". 55 50. Further, and more generally, the parties to this Application can be expected to make full argument and to adduce the necessary lay and expert evidence in relation to any relevant issues
53 Visa Concise Statement of Economic Theory at para. 6. 54 TD Bartle Motion for Leave to Intervene at para. 20(e). 55 See MasterCard Response at paras. 9 to 25. See also Visa Response at paras. 12, 52 and 55.
- 24 raised by the Proposed Intervenors in their leave materials. The Proposed Intervenors have nothing relevant to offer that cannot or will not be put forward by the parties. 51. In this regard it should be noted that the Respondents: (i) have made and are expected to make the same factual and legal arguments that the Proposed Intervenors propose to make with respect to the substantive issues in this proceeding; and (ii) may call representatives of TD Bank and/or the Bankers Association as witnesses at the hearing of the Application if they have relevant and admissible evidence that the Respondents believe might advance their case. There is no need to give the Bankers Association or TD Bank intervenor status in this proceeding to accomplish either of those purposes. 52. Indeed, allowing TD Bank and the Bankers Association to participate as intervenors when the "perspective" of Issuers and Acquirers (to the extent relevant to the matters at issue in this proceeding) can be provided to the Tribunal in an efficient and meaningful fashion through the testimony of the parties and witnesses called by them, would be entirely inconsistent with the mandatory direction in section 9(2) of the Competition Tribunal Act to avoid the undue and unnecessary lengthening and complication of this proceeding. 53. For all of these reasons, the Commissioner submits that the Bankers Association and TD Bank have failed to discharge their onus of establishing that leave to intervene should be granted. The requests for leave to intervene should be dismissed in their entirety.
- 25 -V. ALTERNATIVELY, BANKERS ASSOCIATION CAPABLE OF PROVIDING ANY RELEVANT PERSPECTIVE OF ISSUERS AND ACQUIRERS
54. In the alternative, in the event that the Tribunal concludes that that it would be of assistance to have the perspective of Issuers and/or Acquirers and that granting intervenor status would be the preferable method of obtaining this perspective (both of which are denied), the Commissioner submits that only the Bankers Association should be given leave to intervene. This is so for two principal reasons. First, TD Bank is a member of the Bankers Association and the Bankers Association purports to bring to this proceeding the alleged "multiple perspectives" of all of its member banks, including TD Bank, to the Tribunal. 56 It is therefore unnecessary for TD Bank to also be given intervenor status. Second, as made clear above, the Bankers Association and TD Bank propose to and can make essentially identical representations to the Tribunal. 57 55. Needless duplication would be wasteful and burdensome, and is inconsistent with the mandatory direction in section 9(2) of the Competition Tribunal Act. In keeping with and in furtherance of that mandatory direction, intervention by the Bankers Association alone, rather than by the Bankers Association as well as by one of its members, would provide the full perspective of Issuers and Acquirers, including TD Bank, to the extent that that perspective is even relevant. 58 56 See, e.g., Bankers Association Request for Leave to Intervene at paras. 4, 6, 8, 9, 12 and 13. See also Hannah Affidavit at paras. 3, 12, 13, 20 and 22.
57 Compare Bankers Association Request for Leave to Intervene at paras. 4, 5, 7 and 12 to 15 and Hannah Affidavit at paras. 3, 15, 18 and 21to23 with TD Bank Motion for Leave to Intervene at paras. 11, 12, 20, 23, 25, 26, 28 and 33 to 34 and Sallas/van Duynhoven Affidavit at paras. 8, 29, 32 to 34, 38 and 56 to 62.
58 See D & B, supra at 2 (QL).
- 26 -56. TD Bank claims repeatedly in its motion materials that it has a "unique" perspective given its position as one of the few Canadian financial institutions that operates as "both" an Issuer and an Acquirer. The Commissioner denies that this constitutes a "unique" perspective for two principal reasons. First, it is evident from the requests for leave to intervene that there are a number of financial institutions that are engaged in both Issuing and Acquiring. The Bankers Association notes at paragraph 8 of its Request for Leave to Intervene that the Bank of Montreal and Royal Bank of Canada jointly own Moneris Solutions Corporation, one of the largest Acquirers in Canada. Further, as TD Bank admits in paragraph 18 of its Motion for Leave to Intervene, Caisse Desjardins is also an Acquirer and Issuer. Second, and more importantly, TD Bank has failed to provide any evidence to establish why its status as both an Issuer and Acquirer provides a unique perspective that would in any way be helpful to the Tribunal, or why such a perspective would be preferable to that of the Bankers Association, given that the Bankers Association purports to provide the perspectives of 51 financial institutions, including at least 17 large and small Issuers of credit cards, as well as Acquirers. 59 VI. IF PROPOSED INTERVENORS ARE PERMITTED TO INTERVENE, SCOPE OF INTERVENTION SHOULD BE LIMITED TO REMEDY
57. In the alternative, in the event that the Tribunal concludes that one or both of the Proposed Intervenors should be granted leave to intervene (which is denied), the Commissioner submits that any person that is granted intervenor status should be permitted to intervene only with respect to the issue of the appropriate remedy. Furthermore, that intervenor should be limited to attending and making non-duplicative submissions at motions, pre-hearing
59 See Bankers Association Request for Leave to Intervene at paras. 2 and 4 to 9 and Bankers Association Submission at I, Exhibit "B" to Hannah Affidavit.
- 27 conferences and the hearing of the Application. In the further alternative, if one or both of the Proposed Intervenors are granted leave to intervene and are not limited to making submissions, the Commissioner submits that a lesser level of participation (as described below) than the level requested by the Proposed Intervenors is appropriate.
(a) Substantive Scope of Intervention 58. With respect to the substantive scope of any permitted intervention, the principal issues that the Proposed Intervenors seek to address are the alleged potential financial consequences for themselves or their members, as well as the alleged potential impact on the "Canadian payments system", associated with removing or modifying the Merchant Restraints. 60 These issues relate, if at all, solely to the question of the appropriate remedy, rather than to the application of section 76 of the Act. Neither of the Proposed Intervenors has a "unique" or "distinct" perspective on any of the various legal and factual issues relating to whether the Respondents have engaged in conduct that is reviewable under section 76. Accordingly, the Commissioner submits that the scope of any permitted intervention should be limited (at its very broadest) to the question of the appropriate order to be made in the event that the Tribunal determines that a remedy under section 76 of the Act should be granted. 59. In Air Canada (1992), the Tribunal confined the scope of intervention for a number of intervenors to the issue of remedy alone on the bases that these intervenors were only impacted in the event that the Tribunal granted an order and that they could not make any useful
60 See, e.g., Hannah Affidavit at paras. 3 and 19; Bankers Association Request for Leave to Intervene at paras. 3 and 9-12; TD Bank Motion for Leave to Intervene at paras. 12, 13, 26-27 and 42; Sallas/van Duynhoven Affidavit at paras. 7, 8, 9, 34 and 63(e).
- 28 representations (beyond those of the respondents) on the issue of whether an order should be granted: "I am somewhat narrowly defining the matter upon which I am allowing IBM, VIA and Unisys to intervene. IBM and Unisys are suppliers to Gemini and VIA is a user of Gemini services. No doubt they would all be directly affected if, as several of the respondents predict, Gemini were to fail as a result of an order of this Tribunal allowing Canadian to terminate its hosting contract with Gemini. However, it is not clear that they can make any useful representations beyond those of the respondents with respect to the question of whether the order should be granted: Gemini and the members of the Gemini partnership represented by the respondents can be relied upon, I think, to say everything that can be said for the continued existence of Gemini. It was said in argument that these applicants for leave to intervene should be able to make representations on the nature and form of any relief which might be granted. I believe that this is legitimate as it is a matter upon which they can best speak, having regard to their particular circumstances. I think it would be a legitimate concern of the Tribunal, if it were satisfied that the relief sought by the Director would result in the destruction of Gemini, that any remedy framed should avoid as much as possible harming third parties who may be able to show that they entered into arrangements with Gemini on the strength of the Tribunal's order of 1989. As I cannot foresee how any expert evidence would be particularly useful in respect of framing the order, however, I have not thought that fairness required the possibility of these intervenors introducing expert evidence. It should be sufficient if they demonstrate from the facts of their situation the implications for them of any given remedy". 61 [emphasis added] 60. The Commissioner submits that, as in Air Canada (1992), ifthe Proposed lntervenors are granted leave to intervene, the substantive scope of their interventions should be confined (at its
61 Air Canada (1992), supra at 188-89. See also Canada (Commissioner of Competition) v. Saskatchewan Wheat Pool Inc., [2006] C.C.T.D. No. 6 at para. 5 (Comp. Trib.) (QL) ("SWP (CWB Leave Decision)"); Canada (Commissioner of Competition) v. Saskatchewan Wheat Pool Inc., [2006] C.C.T.D. No. 7 at para. 5 (Comp. Trib.) (QL) ("SWP (CPR Leave Decision)"); Canada (Commissioner of Competition) v. Saskatchewan Wheat Pool Inc., [2006] C.C.T.D. No. 8 at para. 5 (Comp. Trib.) (QL) ("SWP (CN Leave Decision)"); Canada (Commissioner of Competition) v. Saskatchewan Wheat Pool Inc., [2006) C.C.T.D. No. 12 at para. 6 (Comp. Trib.) (QL) ("SWP (VPA Leave Decision)").
- 29 very broadest) to the issue of the appropriate remedy to be granted in the event that the Tribunal determines that the Respondents have engaged in conduct reviewable under section 76 of the Act.
(b) Participation Should be Limited to Making Submissions at Case Conferences and Hearings
61. As for the procedural scope of any permitted intervention, the Proposed Intervenors have failed to demonstrate that an enhanced level of participation is necessary in order for them to participate effectively or meaningfully in this proceeding if their requests for leave to intervene are granted. Instead, both simply presume that they should be granted full rights of participation. 62. Given that the Proposed Intervenors' positions are wholly aligned with those of the Respondents, it is appropriate that the Bankers Association and TD Bank be confined to, at most, making submissions at motions, pre-hearing conferences and the hearing of the Application, and should only be permitted to make submissions to the extent that the Proposed Intervenors establish that those submissions are not duplicative in any way of those of the Respondents and provide adequate notice of any such submissions to the Commissioner. Limiting the Proposed Intervenors' participation in this way is appropriate. On the record before the Tribunal, it is clear that enhanced participation by the Proposed Intervenors is unnecessary as a matter of either fairness or fundamental justice and would only serve to complicate and delay these proceedings, thereby undermining the mandatory direction in section 9(2) of the Competition Tribunal Act.
(c) Procedural Scope of Intervention 63. In the further alternative, in the event that the Tribunal does not limit the Proposed Intervenors to making submissions at case conferences, motions and the hearing of the
- 30 -Application, the Commissioner submits that a lesser level of participation (as described below) than the level requested by the Proposed Intervenors is appropriate. Further, as set out more fully below, should the Tribunal determine to grant the Bankers Association and/or TD Bank intervenor status, the Commissioner submits that it should be entitled to conduct documentary and oral discovery of the Bankers Association and/or TD Bank, as applicable.
(i) The Proposed Intervenors Should be Permitted to Lead Viva Voce Evidence Only in Prescribed Circumstances
64. The Tribunal has interpreted the requirement of fairness, as set out by the Federal Court of Appeal in American Airlines Inc. v. Canada (Competition Tribunal), 62 as requiring that intervenors be given an opportunity to present evidence only insofar as is necessary to establish the factual underpinnings for the arguments they wish to make within the permitted scope of their interventions. 63 Having regard to, among other things, section 9(2) of the Competition Tribunal Act, the right of intervenors to adduce evidence has been restricted by the Tribunal in previous cases with a view to ensuring that such evidence is relevant and not repetitive of evidence put forward by the parties. 64 65. In Air Canada (1992), for example, the Tribunal implemented the following procedural safeguard to ensure that any viva voce evidence to be adduced by intervenors was not duplicative of the evidence put forward by the parties:
62 (1988), 54 D.L.R. (4th) 742 (F.C.A.), aff'd [1989] 1S.C.R.236 ("American Airlines"). 63 See American Airlines, supra at 751. 64 See, e.g., Air Canada (1992), supra at 191; SWP (CN Leave Decision), supra at para. 6; SWP (CWB Leave Decision) at para. 6; SWP (CPR Leave Decision), supra at para. 6; SWP (VPA Leave Decision), supra at para. 7.
- 31 -"6. [T]he intervenors that support the Director's pos1t10n may apply, after the Director has adduced his evidence, to adduce factual evidence of their own, on the following terms and conditions. The application must be made in writing and must contain:
(i) the names of the witnesses sought to be called; (ii) the nature of the evidence to be provided and an explanation as to what issue within the scope of the intervention such evidence would be relevant;
(iii) a demonstration that such evidence is not repetitive (i.e. that the facts to be proven have not been adequately dealt with in the evidence so far);
(iv) a statement that the Director had been asked to adduce such evidence and had refused.
7. The intervenors that support the position of the respondents Air Canada, The Gemini Group Limited Partnership, The Gemini Group Automated Distribution Systems Inc., Covia Canada Corp. and Covia Canada Partnership Corp. may apply in a similar fashion to that described in paragraph 6, but after the said respondents' evidence has been concluded and only after having asked them to adduce such evidence as the intervenors now seek to adduce". 65 66. The same procedural safeguard has been used by the Tribunal in several other cases, including Canada (Commissioner of Competition) v. Saskatchewan Wheat Pool Inc. 66 and United Grain Growers Ltd. v. Canada (Commissioner ofCompetition). 67 67. Accordingly, the Commissioner submits that prior to being permitted to call any viva voce evidence, the Bankers Association and/or TD Bank should first be required provide the
65 See Air Canada (1992), supra at 191. 66 See SWP (CN Leave Decision), supra at para. 5; SWP (CWB Leave Decision) at para. 5; SWP (CPR Leave Decision), supra at para. 5; SWP (VPA Leave Decision), supra at para. 6.
67 See United Grain Growers Ltd. v. Canada (Commissioner of Competition), [2005] C.C.T.D. No. 33 at para. 23 (Comp. Trib.) (QL).
- 32 following information and satisfy the Tribunal that the proposed testimony meets the conditions specified below: (i) the names of the witnesses sought to be called; (ii) the nature of the evidence to be provided by each witness and an explanation as to what issue within the scope of the intervention such evidence would be relevant;
(iii) a demonstration that such evidence is not repetitive, that the facts to be proven have not been adequately dealt with in the evidence so far; and
(iv) a statement that the Respondents have been asked to adduce such evidence but refused.
68. There can be no doubt that the Respondents are aligned in interest (and in strategy) with the Proposed Intervenors. In the absence of safeguards of this nature, dangers of unfairness will inevitably arise. For example, the Respondents could coordinate with the Proposed Intervenors in such a fashion that the Proposed Intervenors would lead evidence that would otherwise have been adduced by the Respondents. If this were to happen, the Commissioner could be left in an unfortunate position that can and should be avoided.
(ii) The Proposed Intervenors Should Not be Permitted to Cross-Examine 69. With respect to cross-examination, the Commissioner submits that the Proposed Intervenors should not be given the right to cross-examine any of the Commissioner's witnesses as this would result in an unnecessary and unjustifiable lengthening of the hearing. There are two Respondents in the present matter, both of which are highly sophisticated and represented by senior and experienced counsel. They undoubtedly can conduct effective cross-examinations of all lay and expert witnesses called at the hearing of the Application by the Commissioner, and subjecting those witnesses to four sets of cross-examinations would be unfair and unwarranted. Further, given their identity of interest and position with the Respondents, it would neither be
- 33 fair nor appropriate to permit the Proposed Intervenors to cross-examine any of the Respondents' witnesses. 70. In the alternative, in the event that the Tribunal permits the Proposed Intervenors to cross-examine any of the Commissioner's witnesses, the Commissioner submits that the Bankers Association and/or TD Bank should each be required to first obtain leave by demonstrating to the satisfaction of the Tribunal that they have questions pertinent to their intervention, which the Respondents were not willing or able to ask. 68 (iii) The Proposed Intervenors Should Not be Permitted to Adduce Expert Evidence
71. While both Proposed Intervenors indicate that they wish to file expert evidence, nowhere in their materials do they identify the experts in question or even the nature or subject matter of the evidence they would like to adduce. Nor have they made any effort to establish that such evidence will differ in any way from expert evidence the parties can reasonably be anticipated to put forward. 72. In Tele-Direct, the Tribunal described as "persuasive" the submission that expert evidence filed by intervenors has, in the past, been largely duplicative of the expert evidence filed by the parties, resulting in a waste of time and resources of the parties and the Tribunal. In the same case, the Tribunal also found that such evidence "does risk being largely duplicative of the parties' expert evidence". 69 Given the identity of interest and position between the Proposed 68 See Air Canada (1992), supra at 192; Canadian Pacific (Leave Decision), supra at 46 and 48; Director of Investigation and Research v. Tele-Direct (Publications) Inc. (1995), 61 C.P.R. (3d) 528 at 536 (Comp. Trib.) ("Tele-Direct").
69 See Tele-Direct, supra at 533.
- 34 -Intervenors and the Respondents, the Commissioner submits that the Tribunal is entitled to presume, in the absence of any evidence from the Proposed Intervenors to the contrary, that any expert reports they might file will be duplicative of those that will be put forward by the Respondents. In these circumstances, the Tribunal should conclude that neither fairness nor fundamental justice require that the Proposed Intervenors have the right to file expert evidence. 70 73. In the alternative, the Commissioner submits that, assuming the Bankers Association and/or TD Bank is granted leave to intervene, the adducing of expert evidence should be dealt with in the same fashion as lay viva voce evidence; namely, the Bankers Association and/or TD Bank, as applicable, should be required to make an application for leave to adduce non-d up1 1 . cah . ve expert ev1 . d ence. 11 (iv) Time 74. To the extent that the Tribunal imposes limits on the time spent during the hearing of this Application in making submissions or conducting examinations or cross-examinations, all time spent by the Proposed Intervenors should be subtracted from the time allocated to the Respondents, rather than the time allocated to the Commissioner.
(v) The Commissioner Should be Given Oral and Documentary Discovery of the Proposed Intervenors
75. In the event that the Bankers Association and/or TD Bank is granted leave to intervene, the Commissioner submits that she should be entitled to documentary and oral discovery of
70 See Air Canada (1992), supra at 189. 71 See Canada (Director ofI nvestigation and Research, Competition Act) v. Air Canada, [1989] C.C.T.D. No. 5 at 4 (Comp. Trib.) (QL). See also Air Canada (1992), supra at 192.
- 35 either or both of the Proposed Intervenors, as applicable. Discovery of the Proposed Intervenors will be essential to enable the Commissioner to properly prepare her case for hearing, to prevent surprise at the hearing and to minimize (to the extent possible) interfering with the expeditious and efficient hearing of the Application. 76. In Canada (Commissioner of Competition) v. United Grain Growers Ltd., the Tribunal endorsed the following statement of the Federal Court describing the purpose of discovery and its important contribution to the fairness and efficiency of a proceeding: "The general purpose of examination for discovery is to render the trial process fairer and more efficient by allowing each party to inform itself fully prior to trial of the precise nature of all other parties' positions so as to define fully the issues between them. It is in the interest of justice that each party should be as well informed as possible about the positions of the other parties and should not be put at a disadvantage by being taken by surprise at trial". 72 77. The Tribunal has frequently required intervenors to provide documentary and oral discovery to one or more of the parties. 73 In Canadian Pacific (Leave Decision), for example, the Tribunal ordered the Montreal Port Corporation to provide documentary and oral discovery to the Director of Investigation and Research prior to calling any factual evidence at the hearing to avoid surprises at the hearing and consequent delays and disruptions. 74 More recently, in Saskatchewan Wheat Pool, the Tribunal granted the Respondents the "right of documentary and oral discovery" of the Canadian Wheat Board (which was generally supporting the
72 Canada (Commissioner of Competition) v. United Grain Growers Ltd., [2002] C.C.T.D. No. 31 at para. 26 (Comp. Trib.) (QL) (quoting Montana Band v. Canada, [2000] 1 F.C. 267 at para. 5 (T.D.)).
73 See, e.g., Canadian Pacific (Leave Decision), supra; Canada (Director of Investigation and Research) v. Canadian Pacific Ltd., [1997] C.C.T.D. No. 18 (Comp. Trib.) (QL); SWP (CWB Leave Decision), supra; SWP (CPR Leave Decision), supra; SWP (CN Leave Decision), supra; SWP (VP A Leave Decision), supra.
74 Canadian Pacific (Leave Decision), supra at 47.
- 36 -Commissioner) m respect of the "topic" on which the Wheat Board was granted leave to intervene. 75 VII. HEARING OF THE REQUESTS FOR LEAV E TO INTERVENE 78. The Commissioner has been advised that a hearing of the requests for leave to intervene has been scheduled and therefore makes no further submissions on this issue. 79. To the extent necessary, the Commissioner reserves the right to make further submissions in respect of the Bankers Association's and TD Bank's respective requests for leave to intervene.
75 See SWP (CWB Leave Decision), supra at para. 6. See also SWP (CPR Leave Decision), supra at para. 6, SWP (CN Leave Decision), supra at para. 6 and SWP (VPA Leave Decision), supra at para. 7, wherein the Tribunal granted the Commissioner the right of documentary and oral discovery of CN, CPR and the VPA in respect of the "topics" on which they were granted leave to intervene.
- 37 -VIII. ORDER SOUGHT 80. The Commissioner requests an order denying the Bankers Association and TD Bank leave to intervene in this Application. ALL OF WHICH IS RESPECTFULLY SUBMITTED Dated at Toronto, this 24 1 h day of February, 2011. om so --avit D. Akman
Davies Ward Phillips & Vineberg LLP Suite 4400, 1 First Canadian Place Toronto, ON M5X 1B1
{;-il1ifillllM iller Department of Justice Canada Competition Bureau Legal Services Place du Portage, Phase I 50 Victoria Street, 22nd Floor Gatineau QC KlA OC9
Counsel to the Commissioner of Competition
- 38 -TO: MCCARTHY TETRAULT LLP Suite 5300, P.O. Box 48 Toronto Dominion Bank Tower Toronto, ON M5K 1E6
F. Paul Morrison Glen G. MacArthur Christine Lonsdale Tel: 416-362-1812 Fax: 416-868-0673
Counsel for the Proposed Intervenor, The Toronto-Dominion Bank AND TO: OSLER, HOSKIN & HARCOURT LLP Box 50, 1 First Canadian Place Toronto, ON M5J 2T3
Mahmud Jamal Michelle Lally Jason MacLean Tel: 416.362.2111 Fax: 416.862.6666
Counsel for the Proposed Intervenor, Canadian Bankers Association AND TO: BLAKE, CASSELS & GRAYDON LLP 199 Bay Street Box 25, Commerce Court West Toronto ON M5L 1A9
Robert Kwinter Randall Hofley Navin Joneja Tel: 416.863.2400 Fax: 416.863.2653
Counsel for the Respondent, Visa Canada Corporation
- 39 -AND TO: McMILLAN LLP Brookfield Place 181 Bay Street, Suite 4400 P.O. Box 747 Toronto, ON M5J 2T3
Jeffrey B. Simpson David W. Kent James B. Musgrove Tel: 416.865.7000 Fax: 416.865.7048
Counsel for the Respondent, MasterCard International Incorporated AND TO: THE REGISTRAR OF THE COMPETITION TRIBUNAL Competition Tribunal Thomas D'Arcy McGee Building 90 Sparks Street, Suite 600 Ottawa, ON K 1D 5B4
CT-2010-010 IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended;
AND IN THE MATTER OF an application by the Commissioner of Competition pursuant to section 76 of the Competition Act;
AND IN THE MATTER OF certain agreements or arrangements implemented or enforced by Visa Canada Corporation and MasterCard International Incorporated.
BETWEEN: THE COMMISSIONER OF COMPETITION
VISA CANADA CORPORATION and MASTERCARD INTERNATIONAL INCORPORATED
Respondents
RESPONSE OF THE COMMISSIONER OF COMPETITION TO REQUESTS FOR LEAV E TO INTERVENE
Davies Ward Phillips & Vineberg LLP Suite 4400, 1 First Canadian Place Toronto, ON M5X lBl
Kent E. Thomson Adam Fanaki Davit D. Akman Tel: 416.863.5564 Fax: 416.863.0871 Department of Justice Canada Competition Bureau Legal Services Place du Portage, Phase I 50 Victoria Street, 22nd Floor Gatineau QC KIA OC9
William J. Miller Tel: 819.953.3903 Fax: 819.953.9267 Counsel to the Commissioner of Competition
Applicant - and -