Card giants accused of throttling IT firm

This comes more than a year after the inquiry, headed by Thabani Jali, found that SA's banks were a “tight-knit oligopoly... sheltered from effective competition” and recommended 28 changes to benefit the consumer.

But the banks have largely brushed off Jali's recommendations, while a government task force, including the commission, Reserve Bank and Treasury, is still studying the proposals.

This new complaint, lodged by former Absa employee Julian Curtiss, hints at frustration sparked by the fact that Jali's competition probe has produced nothing tangible for consumers. In his complaint, Curtiss claims that his Transaction Technology Solutions (TTS) was bullied out of contracts by Mastercard and Visa.

Other players

Curtiss's TTS competes with Integrated Commerce Solutions (ICS) to provide technology services to Mastercard and Visa that allow corporate customers to track spending on credit cards and travel cards. But Mastercard and Visa have refused to allow TTS to implement its systems, preferring to send all business to ICS instead.

Curtiss said that in November 2008, “Mastercard advised TTS that it will not permit TTS to provide (technology) services to any entity... even if (it) desires or has contracted with TTS”.

When Curtiss said he would lodge a complaint with the Competition Commission, Mastercard threatened him. It wrote him a letter saying “any such action would obviously militate further against the prospect of Mastercard establishing a relationship with TTS”.

TTS had already done deals to provide services to the Industrial Development Corporation and the University of Johannesburg. But Curtiss claims Mastercard intervened at the university, leading to ICS being appointed instead for the follow-up work.

No third parties

A letter from the University of Johannesburg says the institution had a visit from Mastercard, which “pertinently mentioned that they will not accept any third party” other than ICS working on the project concerned.

Curtiss said this indicated there was an agreement between Mastercard and ICS which “is prohibited (by competition law), since it has the effect of substantially preventing, impeding or lessening competition”.

His complaint against Visa is similar: Visa also told Curtiss that “the way we prefer to do this right now is to only work with ICS”, and said that TTS was not “an accredited vendor”.

Though this may appear to be a minor issue, it was just such a seemingly trifling complaint from Nutri-Flo in 2002 that led to Sasol recently being fined R250-million by the Competition Tribunal.

If the Competition Commission recommends Curtiss's case be prosecuted in its tribunal, it could have nasty implications for Visa and Mastercard, which provide 5.7 million of the six million credit cards used by South Africans, and nearly all of the 22 million debit cards.

Probe

The commission has confirmed to Business Times that it is probing Curtiss's complaint.

Mastercard country officer Anthony West said he had “already been interviewed” by the commission.

“We responded accordingly, and we now believe the commission is in a round of discussions with other parties about this,” he said.

Visa country officer Charles Niehaus confirmed that the Competition Commission had contacted his company about the complaint. It is now being dealt with by Visa's lawyers in London.

“We take any complaint against us seriously, but you have got to take each case on its merits when someone accuses us of being anti-competitive,” he said.

Competition welcome

Niehaus said that, far from stifling competition, Visa was keen for more competition in SA's banking sector; the more cards used, the higher the fee Visa earns.

While the card companies struck a conciliatory note, ICS chief executive Anthony Fourie described Curtiss's complaint as “absolutely ridiculous”.

“I've dealt with overseas companies for a long time, and when these companies decide to approach the SA market, they usually choose to go with a selected partner, which is entirely in their rights,” he said.

Fourie said he had not been contacted by the Competition Commission.

“It is Curtiss's right to address this matter in any way he sees fit,” he said.

Source: The Times

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