Fight looms over pact on credit card fees
Source: Agencies |
October 15, 2012, Monday
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VISA, Mastercard and a group of retailers plan to ask a judge this week to approve a landmark settlement of a lawsuit over credit card fees, setting the stage for a battle with Wal-Mart and hundreds of other merchants who say it is a bad deal.
Unveiled in July, the US$7.2 billion deal aimed to resolve seven years of antitrust litigation between merchants and credit-card companies and their banks over so-called "swipe fees" that retailers pay to process credit-card transactions.
Merchants alleged the card companies and banks worked together to inflate rates for these interchange fees, costing billions of dollars each year.
If approved, the settlement would apply to the nearly 8 million merchants that take Visa and MasterCard cards.
But in the months since it was filed, a number of major retailers and trade groups have said they would rather have no deal than the one that court-appointed lawyers negotiated on their behalf. On Friday, 10 of the 19 trade groups and stores that led the litigation against the card companies said they would ask US District Judge John Gleeson to reject the settlement.
If approved, the deal would be the largest federal antitrust settlement in US history. In addition to a US$6.05 billion payment and US$1.2 billion in temporary fee cuts, the deal calls on card companies to allow merchants to charge customers extra for using certain cards. It would also release Visa and Mastercard from a wide range of antitrust claims and new lawsuits over interchange fees.
"This is a remarkably and fatally flawed deal," said Jeff Shinder of law firm Constantine Cannon, who argues that the settlement forces merchants to give up valuable legal rights.
Four of the major trade groups now opposing the deal have replaced their court-appointed counsel with Shinder, a veteran antitrust lawyer who has already represented clients in two other multi-billion dollar antitrust settlements with Visa and Mastercard.
Shinder also represents Wal-Mart Stores Inc, the world's largest retailer, which was not part of the original lawsuit, but would be bound by the settlement if approved.
Retailers and restaurants such as Target Corp, Starbucks Corp and Lowe's Cos Inc, and other national restaurant and retailer groups have also said they plan to fight the deal.
Unveiled in July, the US$7.2 billion deal aimed to resolve seven years of antitrust litigation between merchants and credit-card companies and their banks over so-called "swipe fees" that retailers pay to process credit-card transactions.
Merchants alleged the card companies and banks worked together to inflate rates for these interchange fees, costing billions of dollars each year.
If approved, the settlement would apply to the nearly 8 million merchants that take Visa and MasterCard cards.
But in the months since it was filed, a number of major retailers and trade groups have said they would rather have no deal than the one that court-appointed lawyers negotiated on their behalf. On Friday, 10 of the 19 trade groups and stores that led the litigation against the card companies said they would ask US District Judge John Gleeson to reject the settlement.
If approved, the deal would be the largest federal antitrust settlement in US history. In addition to a US$6.05 billion payment and US$1.2 billion in temporary fee cuts, the deal calls on card companies to allow merchants to charge customers extra for using certain cards. It would also release Visa and Mastercard from a wide range of antitrust claims and new lawsuits over interchange fees.
"This is a remarkably and fatally flawed deal," said Jeff Shinder of law firm Constantine Cannon, who argues that the settlement forces merchants to give up valuable legal rights.
Four of the major trade groups now opposing the deal have replaced their court-appointed counsel with Shinder, a veteran antitrust lawyer who has already represented clients in two other multi-billion dollar antitrust settlements with Visa and Mastercard.
Shinder also represents Wal-Mart Stores Inc, the world's largest retailer, which was not part of the original lawsuit, but would be bound by the settlement if approved.
Retailers and restaurants such as Target Corp, Starbucks Corp and Lowe's Cos Inc, and other national restaurant and retailer groups have also said they plan to fight the deal.
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