NEW YORK – The board of the National Grocers Association, a named plaintiff and class representative in the Visa and MasterCard antitrust suit, voted to opt out of the landmark settlement, creating a new dilemma for the federal judge who is reviewing the deal for final approval.

The Grocers’ group said it will formally object to the deal and will urge its 1,200 member companies, including the nation’s biggest grocers, to opt out and object.

The group said the terms of the proposed settlement would curtail the opportunity for merchants to reform the monopolistic fees and rules set by Visa, MasterCard, and their banks by requiring merchants to broadly waive their rights to take future action against the card companies.

While the proposed agreement does provide merchants with the ability to pass along some costs of accepting cards, it only does so under almost 10 pages of burdensome restrictions imposed and enforced by Visa and MasterCard, making it unlikely that many of NGA’s members will be able to make this provision workable, the group said.

In addition, the provision for cost of acceptance charges does little to nothing for grocers who are keenly sensitive to the backlash consumers exhibited to bank fees, and how consumer reactions could particularly affect the ultra-competitive supermarket industry, said the Grocers. Merchants already face the reality that surcharging currently is prohibited in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas, where 42% of all U.S. retail sales are made.

Under the deal, Visa and MasterCard have agreed to pay more than 7 million merchants $7.2 billion, and a handful of banks will pay another $1.2 billion to settle the 2005 antitrust case. Visa and MasterCard will make changes to their bylaws to, among other provisions, allow the merchants to encourage consumers to use cash or other payment payments or to surcharge Visa or MasterCard transactions to discourage their use.

 

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