Tags: Judge | Visa | MasterCard | Swipe

Judge Clears Visa, MasterCard $5.7 Billion Swipe Fee Accord

Friday, 13 Dec 2013 03:25 PM

Visa Inc. and MasterCard Inc. won approval for a $5.7 billion settlement that ended years of litigation with U.S. merchants over allegations that credit card swipe fees are improperly fixed.

U.S. District Judge John Gleeson said that he was satisfied with the settlement, which was estimated to be the largest-ever U.S. antitrust accord.

“For the first time, merchants will be empowered to expose hidden banks fees to their customers, educate them about those fees and use that information to influence their customers’ choices of payment methods,” Gleeson wrote in his ruling Friday in federal court in Brooklyn, New York.

Once owned by groups of major banks, Foster City, California-based Visa and Purchase, New York-based MasterCard have defended themselves for decades against legal claims that they operated as price-fixing schemes. Swipe, or interchange, fees are set by Visa and MasterCard and paid by merchants when consumers use credit or debit cards.

The card firms separated from the banks through initial public offerings in 2006 and 2008. Merchants filed a class-action lawsuit against the card firms and major banks in 2005. They later alleged that the card firms continued to fix prices with the banks even after the IPOs.

Deal Criticized

Lawyers representing merchants nationwide announced the settlement in July 2012. Once worth as much as $7.25 billion, the settlement is valued at about $5.7 billion as of August as a result of reductions for about 8,000 merchants that dropped out of the damages portion.

Dozens of large retailers, including Wal-Mart Stores Inc., Amazon.com Inc. and Target Corp., as well as major airlines, health insurers and other consumer businesses criticized the deal. Some claimed the amount should have been higher and that a legal release preventing future lawsuits was written too broadly.

An expert appointed by the court said merchants might not be able to prove their case at trial and were probably better off taking the settlement, according to a report filed in August.

The settlement “secures both a significant damage award and meaningful injunctive relief for a class of merchants that would face a substantial likelihood of securing no relief at all if this case were to proceed,” Gleeson said.

“We are pleased that Judge John Gleeson has granted final approval to the U.S. merchant class settlement agreement,” Noah J. Hanft, MasterCard general counsel, said in a statement. “Today is an important milestone in putting this litigation behind us and we look forward to working in partnership with the merchant community.”

The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).

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Visa Inc. and MasterCard Inc. won approval for a $5.7 billion settlement that ended years of litigation with U.S. merchants over allegations that credit card swipe fees are improperly fixed.
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Friday, 13 Dec 2013 03:25 PM
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