TORONTO — Canada's major banks and credit card lenders may face a national class action lawsuit over alleged merchant-related price fixing conspiracies if the application is certified.

The claim, filed Monday in the Supreme Court of British Columbia, alleges that Visa and MasterCard and the major card-issuing lenders have conspired to increase or maintain the fees paid by merchants on every card transaction.

The certification process is expected to take well over a year, depending on how hotly contested the process becomes, Greg McMullen, a litigation associate at Branch MacMaster LLP, told Dow Jones.

The lawsuit names Visa Inc.'s Visa Canada Corp., MasterCard International Inc., Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Desjardins Financial Group Inc., National Bank of Canada, Royal Bank of Canada, Toronto-Dominion Bank, Bank of America Corp.'s MBNA Bank Canada, Capital One Financial Corp. and Citigroup Inc.

It comes after the Competition Bureau said in December that Canada's two largest card companies use "anti-competitive" rules to prevent merchants from encouraging shoppers to use cheaper payment options, such as cash or debit. The competition watchdog, acting on a complaint from Canadian retailers, has asked a tribunal to strike down their rules.

Canadian merchants paid C$5 billion in merchant-discount fees in 2009, according to the Canadian Commissioner of Competition. Visa and MasterCard account for 90% of Canada's credit-card transactions.

The merchant discount fee, which is calculated as a percentage of the sale price of the good or service supplied, consists of an interchange fee paid the issuing bank, the service fee, which is retained by the acquirer, and the network fee paid to either Visa or MasterCard. The interchange fee is typically 80% of the merchant discount fee, the suit says.

The claim alleges that Visa and MasterCard rules force merchants to accept every Visa or MasterCard credit card, even if those cards carry high fees for merchants. It also alleges that the rules prevent merchants from charging more for payments with premium cards.

When a customer pays with a credit card, Visa and MasterCard take a percentage fee, along with the card-issuing bank and the company that processes the payment. The percentage varies depending on the type of card. Basic cards charge a smaller percentage, while premium cards that offer points and other rewards cost merchants a much higher fee, the suit said.

Branch MacMaster and Camp Fiorante Matthews filed the proposed class action on behalf of Mary Watson, a furniture store merchant in Vancouver. The action dates back to 2001.

The card companies and issuers weren't immediately available to comment.

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