The appellant ("Costco") entered into a conventional "Merchant Agreement" with the Amex Bank of Canada ("Amex") pursuant to which it agreed to pay the discount fees of Amex, and at the same time entered into a "Co-Branding Agreement" under which it agreed to accept only Amex credit cards and Amex agreed to make payments to it equal to Y% of the discount fees earned by it.
In finding that the Y% payments were consideration for a taxable supply by Costco, Sharlow JA stated (at paras. 44-45):
The value to Amex of exclusivity is readily discernible from the contractual terms. Every Costco sale on a credit card other than an Amex credit card would reduce the value to Amex of the entire co-branding arrangement. …
In my view, the interpretation of the contracts that is more consistent with the language of the contracts and the undisputed facts is that [such] payments were consideration paid by Amex to Costco, either for Costco entering into the Co-Branding Agreement, or specifically for the exclusivity provision.