NEW YORK – The powerful retailers lobby reiterated its opposition to a proposed antitrust settlement with Visa and MasterCard settlement submitted Friday to the federal court, even after minor amendments to the proposal—setting up a potential battle royal in court.
“The proposal put on the table this summer was beyond tweaking, and the update presented today proves that fact. It remains manifestly unfair,” said Mallory Duncan, general counsel for the National Retail Federation, which has been fighting the card networks over interchange fees for two decades. “The settlement still does virtually nothing to protect retailers or their customers from the abuses of the card industry, and it attempts to silence any objections for years to come. Retailers would rather take their chances in court than accept this one-sided swindle written by the card industry for the card industry.”
The opposition by the retailers’ lobby and ten of the 19 named plaintiffs in the seven-year antitrust case could scotch the landmark settlement in which Visa and MasterCard have agreed to pay seven million retailers more than $6 billion and a handful of banks another $1.2 billion. The deal also calls for an eight-month reduction in credit card interchange rates for merchants and rule changes that could potentially allow retailers to impose surcharges on customers’ purchases.
The impact of the deal could be enormous for credit unions, which earn an estimated $5 billion in card fees from Visa and MasterCard annually and will help fund the settlement. Duncan told the Credit Union Journal the costs of a settlement could be significantly greater—a court can award treble damages in antitrust cases—if the case goes to trial.
A revised version of the settlement was filed in U.S. District Court for the Eastern District of New York on Friday and opponents are expected to have 30 days to voice their objections to the deal. Several named plaintiffs groups have already indicated they will do so.
Among the amendments to the deal are agreements by Visa and MasterCard to meet with merchant buying groups that seek to negotiate interchange rates collectively, like independent drug stores, while retaining discretion to accept or reject a proposal based on whether the card companies believe such a deal is commercially reasonable.
The retail federation is not a party to the lawsuit over credit card fees, but represents thousands of retailers who would be affected if the case is approved as a class action and has been authorized by its board to go to court to block the settlement. The group also led the effort to cap debit card fees under the Durbin Amendment.
The various opponents of the deal say the proposal does little to change the structure of the credit card fees market, which is dominated by Visa and MasterCard, and they also oppose the settlement’s bar on individual merchants pursuing separate litigation.
“The agreement is very much in the interests of the merchants and those who have objected are either misinformed or have other agendas, or both,” said K. Craig Wildfan, lead lawyer for the plaintiffs, who negotiated the deal.
But the retailers’ Duncan, who has led the charge against card fees, disagrees. “It should prove very significant to the court that the majority of the plaintiffs in this case have repudiated the settlement, and that includes half a dozen national trade associations representing thousands of merchants,” Duncan said. “The lawyers and handful of retailers who support the settlement do not represent the retail industry.”