Tags: discover | files | antitrust

Discover Files $6B Antitrust Suit Against Visa, MC

Tuesday, 10 Jun 2008 09:13 AM

NEW YORK (Reuters) - Discover Financial Services wants roughly $6 billion in damages from larger rivals Visa and MasterCard in a long-running antitrust lawsuit, court documents made public on Monday show.

The claim was cited in court papers that previously were kept confidential in the case, first filed four years ago. Discover contends that Visa and MasterCard violated antitrust law and harmed Discover's business by preventing their member banks from issuing credit cards for Discover's network.

"We remain very confident in our strong cases against both Visa and MasterCard that seek damages for the harm their anti-competitive practices have caused us," Discover said in a statement.

Both Visa and MasterCard disputed Discover's damages claim, which could potentially be tripled if Discover prevails at trial. A trial has been set for September in U.S. District Court in New York.

The amount of damages sought by Discover "is dramatically overstated," San Francisco-based Visa said in a statement. MasterCard, based in Purchase, New York, said that Discover's damages claim "is baseless."

Shares of all three companies were down in late afternoon trading on the New York Stock Exchange. Visa was down 3 percent, MasterCard was down 1.2 percent and Discover was down 2.9 percent.

According to a Visa court filing, Discover has put forward a damages theory "that totals approximately $6 billion, before trebling, and is based upon multiple banks issuing credit or debit cards on the Discover network."

In November 2007, Visa agreed to settle a similar lawsuit with American Express for about $2.1 billion.

Visa previously placed $3 billion into a U.S. litigation escrow account with net proceeds from its March initial public offering -- funds that were withheld from its U.S. member banks' distribution in the IPO. The company said this account has been used to pay the American Express legal settlement and "will be used to pay for any future settlement of, or judgment

in" other related litigation.

Discover, formerly a unit of Morgan Stanley, and American Express brought their lawsuits in 2004, soon after the U.S. Supreme Court let stand a lower court ruling in a lawsuit that found that Visa and MasterCard violated antitrust laws. That lawsuit had been filed by the Justice Department.

MasterCard stock was down 6.34 to $289.39 on Monday afternoon, Visa was down $2.53 to $81.12, and Discover was down 46 cents at $15.24.

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NEW YORK (Reuters) - Discover Financial Services wants roughly $6 billion in damages from larger rivals Visa and MasterCard in a long-running antitrust lawsuit, court documents made public on Monday show.The claim was cited in court papers that previously were kept...
discover,files,antitrust
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2008-13-10
Tuesday, 10 Jun 2008 09:13 AM
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