Friday, 4 September 2015

Competition law & economics

Competition geeks may be interested in the ACCC's successful prosecution of Visa over dynamic currency conversion (DCC) in Australia. Visa was fined $18m plus costs today.

As the economics expert for the ACCC in this case, I'm pleased with the outcome even though I missed out on being cross-examined at trial due to pre-trial settlement of liability. I do like a good argument.

Two points are of potentially broader interest... 

First, the conduct that was admitted by Visa occurred in a very narrow market: the market for currency conversion on the Visa network. If you follow the normal economic method of defining markets, then this really is a market. Its existence was vigorously contested by Visa's economist but prevailed in the end. 

Second, the ACCC abandoned its s46 claim in return for Visa admitting it breached s47. In announcing the result, the ACCC noted 
"the significant legal hurdle and complexity presented by proceedings under section 46"
So while it's nice for the ACCC to get a competition case win, this doesn't vindicate Australia's s46, much less NZ's equivalent s36. Misuse of market power remains problematic in the antipodes.

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