ACCC Action Is Unacceptable Conduct - 4 September 2000

National Australia Bank today expressed great concern at the conduct of the Australian Competition and Consumer Commission in singling out the National in an action for alleged price fixing under Section 45A of the Trade Practices Act.

The National denies the allegations made by the ACCC that the bank had breached the Act in relation to the setting of credit card interchange fees.

The action against the National alone is unusual as other financial institutions are members of the three credit card schemes VISA, Mastercard and/or Bankcard that involve the setting of an interchange fee.

National managing director and chief executive officer, Mr Frank Cicutto said: "I am very concerned that the National has been targeted in this way. All major financial institutions are involved in the interchange arrangements, not just the National. The National stands in no different position from any other financial institution.

"We have been involved in discussions with the ACCC to try and resolve its concerns, yet these legal proceedings have been instituted without consultation and despite our active participation in an industry review being undertaken with the agreement of the ACCC.

"At all times the National has been willing to discuss the allegations and work towards a solution. This remains the case and any suggestion otherwise is simply not true.

"I am at a loss to understand why this action has been taken without notice while active discussion is taking place. We had an undertaking from the ACCC that legal proceedings would not be instituted without consultation.

"Taking action against the National alone for alleged price fixing is absurd and is an unwarranted slur against our company and employees.

"This appears to be a tactical move to force changes before reasonable review of the situation has taken place. It is very disappointing and does not create a positive environment for corporations when dealing with the ACCC.

"We had understood from the ACCC that the National was peripheral to the original complaint made to the ACCC," Mr Cicutto said.

It was ironic that the National, alone among the major banks, advocated opening the payments system to new participants in its submission to the Wallis Inquiry into Australia's Financial System but has now been singled out by the ACCC.

An interchange fee is a global practice associated with most major credit card schemes and the rate set in Australia is one of the lowest in the world.

Credit card transactions in Australia are supported by a large systems and communications infrastructure, which allows millions of transactions to take place in real time on a daily basis.

The interchange fee covers the joint costs of the merchant acquiring financial institutions and card issuing financial institutions.

The National is seeking further legal advice before responding to the ACCC statement of claim made in the Federal Court today.