Reasons today from Chief Justice Bauman, still of the Supreme Court at the time of the application, on a proposed class action against Visa, MasterCard, Royal Bank, BMO, and most of the major financial institutions in Canada.  By my count, 31 lawyers, including several of the top litigators in the province, are listed as counsel on the matter (4 for the plaintiff, 27 for the various defendants).

The allegation is that the credit card networks (Visa and MasterCard) conspired with their member banks to impose certain rules on merchants that violate the Competition Act.  The rules include prohibiting merchants from discriminating against certain cards.  For example, premium cards (that provide greater benefits to cardholders) come with higher fees resulting in the merchants receiving a smaller percentage of the purchase price.  The anti-discrimination rules prohibit merchants from refusing to accept these cards or charging a surcharge on them.  By imposing these rules on merchants, the plaintiff alleges the credit card industry was able to maintain “supracompetitive” fees as they were not subject to the competitive market which would tend to drive lower fees.  All merchants who have accepted Visa or MasterCard payments since 2001 would be part of the proposed class

The defendants mounted a vigorous but ultimately unsuccessful defence to certification over the 11-day hearing.  Much of the opposition was based on defences specific to class proceedings, a rapidly evolving area of law.  However, Chief Justice Bauman seems not to have been swayed by their first line of defence which boiled down to: “How dare you accuse us of misfeasance?”

[22]         The defendants quite dramatically contrasted the fact that they literally represent the largest and most respected financial institutions in Canada with the serious allegations of corporate impropriety levelled at them by the plaintiff over the 29 pages of the Amended Notice of Civil Claim. This submission was as much to say: how could such large and revered institutions have ever stooped to the scandalous conduct alleged by this reckless plaintiff? While, in part, it is an effective bit of advocacy in setting a realistic stage for the plaintiff’s difficult case, its relevance on the certification hearing bears serious critical consideration.

If only the size of a corporation were enough to guarantee its good behaviour…