Payment card interchange fee and merchant discount antitrust litigation
On Sept. 24, 2024, the U.S. Department of Justice filed a civil antitrust lawsuit against Visa alleging "monopolization and other unlawful conduct in debit network markets in violation of Sections 1 and 2 of the Sherman Act.
This change, set to last five years, was expected to save retailers about $30 billion and mark the end of a long-standing legal battle over antitrust issues involving these two major credit card issuers.
In their complaint, the plaintiffs also alleged that the defendants unfairly interfere with merchants from encouraging customers to use less expensive forms of payment such as lower-cost cards, cash and checks.
[9] On November 27, 2012, United States District Judge John Gleeson entered an order granting preliminary approval to a proposed settlement.
[9] The settlement provides for the cash equivalent of a 10 basis-point reduction (0.1 percent) of swipe fees charged to merchants for a period of eight months.
"[14] The National Retail Federation said, "that card company fees are the problem and the surcharge story is a volume that belongs on the fiction aisles.
"[15] Opponents object to provisions that would bar future lawsuits and even prevent merchants from opting out of significant portions of the proposed settlement.
Stephen Neuwirth, a lawyer representing Home Depot, said, “It’s so obvious Visa and MasterCard were prepared to make a large payment because of the scope of the releases being given.
A group of large merchants including Kroger, Walgreens, and Safeway have reached a separate agreement with the defendants over swipe fees.
"[10] Josh Floum, general counsel for Visa, responded, “Our belief that the agreement will eventually receive final approval was strengthened today.
Hank Armour, president and CEO of NACS said, "It is important to note that if you do nothing, it will be presumed by the court that you accept the terms of the proposed settlement.
[17] Prior to this settlement, merchants won a major victory against payment processors and card issuers with the passage of the Dodd-Frank financial reform bill.
[18] Richard Durbin, the senator from Illinois who was the main proponent of those rules, has called the proposed settlement on credit card swipe fees, "gives Visa and MasterCard free rein to carry on their anti-competitive swipe-fee system with no real constraints and no legal accountability.
The law firms in question are Robins, Kaplan, Miller & Ciresi; Berger Montague; and Robbins Geller Rudman & Dowd LLP.
Gleeson said he appointed Sykes would "advise the court with respect to any economic issue that may arise in connection" with final approval of the settlement.
[10] Co-lead class counsel include Laddie Montague, Merrill Davidoff, and Michael Kane of Berger Montague; Craig Wildfang, Thomas Undlin, and Ryan Marth of Robins Kaplan Miller & Ciresi; Patrick Coughlin, Bonny Sweeney, David Mitchell, Alexandra Bernay, and Carmen Medici of Robbins Geller Rudman & Dowd.
Counsel representing MasterCard include Keila Ravelo, Wesley Powell, and Matthew Freimuth of Willkie Farr & Gallagher; Kenneth Gallo, Joseph Simons, Andrew Finch, and Gary Carney of Paul Weiss Rifkind Wharton & Garrison.
