(Xinhua Photo)

    BRUSSELS, Oct. 3 (Xinhua) -- The European Union's antitrust watchdog announced on Wednesday that it has fined credit card giant Visa 10.2 million euros for refusing to admit Morgan Stanley as a member of its network in Europe.

    The European Commission said in a statement that from March 2000 to September 2006, Visa denied Morgan Stanley's membership "without an objective justification," constituting restrictive business practices in breach of EU competition rules.

    Morgan Stanley started its Morgan Stanley Bank in Britain in 1999 and sought to become a member of the Visa organization one year later, which Visa refused.

    An investigation was opened by the commission in 2000 following a complaint from Morgan Stanley and found that the exclusion of Morgan Stanley from Visa membership restricted competition in the provision of credit card acceptance services to merchants in the British market.

    The investigation revealed that retailers expect banks to offer card acceptance contracts as a package including both Visa and MasterCard. Therefore, Visa's refusal to admit Morgan Stanley as a member not only prevented Morgan Stanley from providing services to merchants as regards Visa transactions, but also as regards other payment cards transactions.

    "The commission will not tolerate anti-competitive behavior and will intervene if companies are illegally refused membership of payment card networks," the EU Competition Commissioner Neelie Kroes said.

    Visa reached a settlement with Morgan Stanley and admitted the bank as a member in September 2006. As a result, Morgan Stanley withdrew its complaint with the commission.

    The commission said although the complaint was withdrawn and the infringement ceased, it still decided to impose a fine.

    As a reason to prevent Morgan Stanley's membership, Visa invoked an internal rule according to which Visa would not accept as a member any applicant which is deemed by the board of directors to be a competitor.

    Morgan Stanley did have its own Discover card network in the United States, but the commission concluded there was no realistic possibility that Discover would expand to the EU.

    Since Visa admitted Citigroup, which also runs the Diners Club network, the commission found Visa applied its internal rule in a discriminatory manner.

    Morgan Stanley was excluded although it had concrete plans and expertise to contribute to more efficient competition and generate positive effects on prices and the quality of service, the commission said.

    Visa Europe President and Chief Executive Peter Ayliffe said in a statement that the company would appeal the decision.

    "We do not believe that Visa Europe infringed EU competition law. There is no value as a precedent to this decision," he said.