On 1 September 2015 it was reported that the ACCC had settled its case against Visa,1 the second in a pair of recent cases brought against international giants for misuse of market power under section 46 of the Competition and Consumer Act 2010 (CCA).  

The ACCC’s last action under section 46 – against Pfizer Australia2  – was comprehensively dismissed in June, adding to calls for reform of the section along the lines recommended by the Harper Competition Policy Review.  The Harper recommendations were due before Cabinet on the day that the Visa settlement was reported – and it was speculated that the government’s decision to defer consideration of section 46 was driven in part by the ACCC’s reported success.

The ACCC quickly announced that it had indeed settled the case for a substantial $18 million - with an additional $2 million in costs – but made it clear that it had settled the case as a prohibited exclusive dealing arrangement under section 47 of the CCA, not a misuse of market power under section 46.

In this update we discuss the facts and findings of the Visa case, the way its penalties were determined and what the settlement might mean for the future of section 46.

The Facts

When a credit card holder purchases something in a foreign currency online or while travelling overseas, the credit card network supplier – in this case Visa – will typically convert the purchase price into the cardholder’s local currency, making money from conversion fees and the foreign exchange markets. 

In 2010, Visa derived more than US$2 billion of its total US$8 billion revenues from foreign currency transactions. In Australia its revenues from foreign currency transactions were estimated at up to US$22 million.

However, by 2010 Visa’s currency conversion revenues were increasingly threatened by third-party suppliers of dynamic currency conversion (DCC) services such as Pure Commerce, Global Blue Currency Choice, Fexco, Travelex and WorldPay.  DCC services allow merchants to charge foreign customers in their local currencies, whether through online payments or point of sale facilities.

These services can bypass the currency conversion fees charged by credit card companies like Visa – though the providers charge their own fees and margins, which are typically shared between the DCC processor, the merchant and the merchant’s bank, and may result in an effective exchange rate two or three percentage points worse than the credit card rate.  As Justice Wigney noted:

Cardholders are not necessarily better off if they elect to have their purchase proceed by way of a DCC transaction. Much will depend on the exchange rate margin charged by the DCC provider. Issuing financial institutions also may charge a cross-border fee on an international transaction regardless of whether it is treated as a single-currency or multi-currency transaction.3 

However, DCC services can give customers a better idea of the ultimate price that will be charged on their credit card bill, and some banks do not charge cross-border fees on top of currency conversion fees.

By April 2010, around 20,000 merchants in Australia were offering DCC services. There was evidence that senior Visa executives were concerned that the increasing provisions of DCC services would lead to a decrease in foreign currency trading revenue and a consequential loss of fee revenue for Visa.  Visa then altered the terms of its agreement with banks to prevent any new merchants from signing up to these services.  A number of banks and DCC processors complained about this change, and regulators in the United States, Singapore, Korea, New Zealand and Australia began to investigate.  

Visa reversed its decision in October 2010 but the ACCC commenced legal action in February 2013 anyway.  The ACCC alleged that Visa had misused its market power for the purpose of limiting or preventing competition in currency conversion services – and that it had engaged in prohibited exclusive dealing by providing its services on the condition that banks and merchants did not acquire DCC services.

The case was due for hearing commencing 31 August 2015, with settlement occurring, in Justice Wigney’s phrase, “on the eve of the trial”. Visa admitted that its conduct constituted a contract, arrangement or understanding with the effect or likely effect of substantially lessening competition under sections 47(1), (2) and (10) of the CCA, and the ACCC agreed to drop its claim under section 46.

Justice Wigney concluded that the agreed statement of facts and admissions submitted by Visa and the ACCC were sufficient to establish a breach of section 47.  The Court found that the market in which Visa’s conduct had had the likely effect of substantially lessening competition was the market in Australia for currency conversion services on the Visa payment card network.


Following the decision of the Full Federal Court in Director, Fair Work Building Industry Inspectorate v CFMEU,4  parties and regulators are no longer permitted to submit agreed or recommended civil penalties or ranges of civil penalties to the courts – see our recent update.  Serious concerns have been expressed that the case may discourage settlement with regulators and enforcement agencies such as the ACCC, and the Commonwealth has appealed the case to the High Court.  

However, Director v CFMEU allows the parties to make submissions on the relevant principles to be applied in determining civil penalties.  These will generally include consideration of the seriousness of the breach; the cooperation, previous conduct and corporate culture of the contravener; and whether the penalty will have a deterrent effect given the size and financial position of the contravener – all in the context of the maximum penalty that may be imposed.

The maximum penalty for a breach of either section 46 or 47 is the greatest of:

(a) $10 million;

(b) three times the benefits that have been obtained from the breach – where that can be determined; and

(c) where those benefits cannot be determined, 10% of the annual turnover over the 12 months leading up to the breach.

In the Visa case, the parties agreed that it was not possible to determine the benefits obtained from the breach, and that Visa’s relevant turnover in Australia was $331 million. Since there was only a single contravention of section 47 in issue, the parties were therefore effectively able to agree on a maximum penalty of $33.1 million for the offending conduct.

The parties made further submissions acknowledging Visa’s cooperation with the ACCC; the benefits of avoiding a lengthy hearing; the legitimate reasons Visa had for engaging in the conduct, including the protection of its customers; and Visa’s strong culture of compliance with competition law.

The parties accordingly submitted that the contravention was of mid-range seriousness and that the appropriate penalty should be towards the top end of the mid-range of penalties available. Based on these submissions and the effective agreement on the maximum penalty, the eventual penalty of $18 million seems almost inevitable.

Justice Wigney took the time to reflect on the parties’ capacity to reach a settlement despite the difficulties imposed by the Full Federal Court in Director v CFMEU:

It should also perhaps be noted in this context that the sensible and reasonable settlement reached in this matter puts paid to the somewhat dire warnings that followed the decision of the Full Court in Director, Fair Work Building Industry Inspectorate v CFMEU to the effect that the inability of the parties to put an agreed penalty figure or range to the Court would stifle settlement of matters such as this.5 

It is likely that the decision in Director v CFMEU was not a significant impediment to the parties resolving this matter on a consent basis, and neither the ACCC nor Visa could claim to be surprised by a penalty of $18 million when they had been able to agree on all of the facts, that the maximum penalty was $33.1 million and that a mid-range penalty would be appropriate.

However, many cases will throw up considerably greater difficulties than this one under the approach dictated by Director v CFMEU, particularly where the turnover of the defendant is much larger or where, as is common in cartel cases, there are multiple contraventions. In such cases, the theoretical maximum penalty could be much higher than in this case, and even if parties could agree that the penalty should be in the lower, mid or upper range this could still leave considerable uncertainty as to the actual monetary penalty to be imposed by the Court.

Therefore, while this case is an encouraging example of circumstances where Director v CFMEU has had little impact on the ability of the parties to settle, given its particular features we are not as confident as the Court appears to be that it has put paid to the concerns raised by Director v CFMEU.

What about section 46?

Before the full details about the legal basis of the Visa settlement emerged, a number of lawyers and business leaders commented that the result showed that the reform of section 46 was not as urgent as the ACCC and the Minister for Small Business had argued.  For example, Westpac and Transurban chairman Lindsay Maxsted said:

I certainly come from the camp where the ACCC has enough powers at its disposal to deal with this, so to create another wave of regulation through section 46 just isn’t right.6 

The ACCC was quick to challenge these suggestions:

The ACCC has seen media reports speculating that this matter was resolved on the basis that Visa admitted a contravention of section 46 of the CCA. This was not the case. The ACCC has an obligation to resolve proceedings wherever appropriate and practicable, and given Visa’s admission in this case of a serious contravention of section 47 the ACCC did not further press allegations in relation to section 46.  One reason for this is the significant legal hurdle and complexity presented by proceedings under section 46 of the CCA.7 

ACCC Chair Rod Sims went further:

Certain large businesses were trying to say that the Visa case shows that section 46 as it stands works. That’s not true. We took it as a section 47 case and to me it shows the opposite, it shows exactly why we need to change 46 because we want to stop this sort of behaviour all the time, not just when it involves exclusive dealing…8

The biggest problem is the current misuse of market power laws are largely unusable, which is why we didn't use it here. We took exclusive dealing even though it was a large competitor seeking to exclude rivals.  Doing that however won’t help us in cases involving predatory pricing, bundling of goods in various ways or buying up inputs to production.9

Because the Court never had the opportunity to rule on the ACCC’s section 46 claim, it is difficult to infer much from the Visa case about the operation of section 46 itself.  

The ACCC does have a wide range of tools to combat anticompetitive conduct under the CCA and it frequently runs parallel claims under sections 45, 46 and 47. The unconscionable conduct provisions of the Australian Consumer Law have already proved effective in addressing certain kinds of unilateral conduct, and section 50 has been used to prevent potentially anti-competitive acquisitions including acquisitions of land.

It is also clear that purely unilateral conduct that cannot be characterised as an exclusive dealing, a contract, arrangement or understanding, an acquisition or an example of unconscionable conduct may only be caught by section 46.  

However, it is not clear how widespread this anti-competitive conduct may be, or whether the current section 46 is as unusable as the ACCC argues.  Even since the contentious Rural Press10  case, the ACCC has successfully settled four section 46 claims (against Fila, Eurong Beach Resort, Cabcharge and Ticketek) and won one contested section 46 claim (against Baxter Healthcare).  

Most significantly, the legislative amendments introduced in 2008 to address concerns with Rural Presshave only been tested once – in the ACCC’s recent case against Pfizer.11   While the appeal court may reach different conclusions, the state of the law after recent amendments remains speculative.  

In this respect it is unfortunate that the Visa case was settled, as it may have provided a useful test of the purpose and take advantage elements under the current section 46.  On the admitted facts, at least, it appears that Visa would have had one of the exclusionary purposes proscribed by section 46 – certainly not Visa’s only purpose, but a substantial one. 

Whether Visa took advantage of its market power is less clear.  Although it had legitimate business reasons for excluding DCC processors, it might have been prevented from doing so in a competitive market as the DCC processors would have gone to other credit card companies. As a result, even on the narrow Rural Press interpretation of “take advantage,” the conduct may have been caught.  

Under the broader test introduced by the 2008 amendments, it is more likely that Visa’s conduct may have been materially facilitated by its market power, entered into in reliance on its market power, or otherwise related to its market power – or that Visa may not have been likely to engage in the conduct if it did not have market power to protect.  A real test of the 2008 amendments will have to wait.


In some ways this was not an obvious case for the ACCC to take on. DCC services are likely to benefit the processor, the merchant and the merchant’s bank, but the benefits they provide to consumers are not straightforward. Recent articles in the Australian media have described DCC as “a robbery being perpetrated by banks upon the unwitting customers”12  and have warned that:

The most constant piece of advice is that when asked to click or accept dynamic currency conversion: just say no!13 

On the agreed facts, there was certainly a consumer protection aspect in Visa’s decision to prohibit additional DCC services in 2010 – even though it may also have protected Visa’s revenues and lessened competition.  Justice Wigney addressed this potential conflict directly:

A strong message needs to be sent to corporations in the position of Visa Worldwide that they should not, and indeed, cannot, respond to even legitimate corporate concerns by imposing conditions on their supplies, in the nature of exclusive dealing, which have the likely effect of substantially lessening competition in markets in Australia. Such a response is never an appropriate response.14 

It is true that the “substantial lessening of competition” test leaves little scope to argue legitimate corporate concerns – which may best be addressed as public benefits under the authorisation or notification processes. 

However, in pursuing this case the ACCC may have been too focused on competition as an end in itself, rather than as a mechanism for maximising consumer welfare.  In these circumstances it may be fortunate that the settlement avoided the time and expense of a full hearing.

In the end, the Visa case may be most interesting for its approach to agreed facts and penalty principles and for its brief role in the history of section 46 reform, which remains uncertain.  The new Prime Minister and the Deputy Leader are said to be opposed to the Harper effects test,15  but it has been reported that the Prime Minister has agreed to bring the Harper proposal back before Cabinet as part of the new Coalition agreement with the National party.16  It is not clear what the role of the Small Business Minister will be in the new government, with a potential argument for separating the Small Business and Competition Policy portfolio.


1      Australian Competition and Consumer Commission v Visa Inc [2015] FCA 1020. 

2      Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 607. 

3      At [45].

3     (2015) 229 FCR 331.

5     At [122].

6     “Visa faces $20m fine in landmark ACCC case”, Sydney Morning Herald 1 September 2015. 

7     ACCC press release, “Visa ordered to pay $18 million penalty for anti-competitive conduct following ACCC action”, 4 September 2015.

8     “Record Visa fine indicates laws must change, says ACCC chief”, The Australian, 5 September 2015.

9      Visa court case demonstrates need for competition reform: ACCC”, Australian Financial Review, 4 September 2015.

10    Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75. 

11    Australian Competition and Consumer Commission v Pfizer Australia Pty Ltd [2015] FCA 607.

12   “Dynamic currency conversion – robbery by choice”, Sydney Morning Herald, 30 March 2015. 

13   “Have you been a victim of dynamic currency conversion?” mozo.com.au, 13 February 2013.

14    At [108].

15   “Bruce Billson embroiled in cabinet split over tougher competition laws”, Guardian, 1 September 2015