NEW YORK -- The National Retail Federation and more than a dozen of the nation’s most prominent retailers today asked a judge to reject the proposed Visa/MasterCard antitrust settlement, saying it would not bring credit card swipe fees charged by Visa and MasterCard under control and does not give retailers who oppose it an adequate mechanism to opt out.

“The proposal pending before the court does nothing to keep these soaring fees from continuing to drive prices higher for American consumers, and would block merchants who believe in true swipe fee reform from ever having their day in court,” said Mallory Duncan, general counsel for the retailers, which are not name plaintiffs in the antitrust suit.

Meantime, ten of the 19 named plaintiffs in the case also filed their opposition to the deal with the court today. They are: Coborn’s Inc.; D’Agostino Supermarkets, Inc.; Jetro Holdings, Inc. and Jetro Cash & Carry Enterprises, LLC; Affiliated Foods Midwest Cooperative, Inc.; National Association of Convenience Stores; National Association of Truck Stop Operators; National Community Pharmacists Association; National Cooperative Grocers Association; National Grocers Association; and the National Restaurant Association.

“The volume and depth of the opposition is remarkable,” Brian Dodge, chief spokesman for the Retail Industry Leaders Association, another opponent, told the Credit Union Journal this afternoon. “The speed at which it has materialized shows just how unhappy the merchants are with the settlement that was negotiated on their behalf.”

“We question whose interests are being served here – merchants and their customers or the card companies and lawyers,” Duncan said. “Instead of improving the situation, the proposed settlement would cast in stone the very problems that need to be fixed. And while the settlement gives pennies on the dollar to merchants, it seeks three-quarters of a billion dollars for the lawyers involved. Sophisticated retailers who have scrutinized the tentative deal realize it provides relief for no one, and don’t want this blatant endorsement of the credit card industry’s abuses pushed on them or their customers.”

NRF argued in a brief filed today that preliminary approval should be denied, saying the settlement cannot legally be certified as a class action because it attempts to force a one-size-fits-all solution onto an wildly diverse group of merchants. NRF also argued that a provision barring all retailers – including those who opt out of the settlement and even those who do not yet exist – from filing future lawsuits over swipe fees is impermissibly broad under federal law. The provision would allow the card industry to continue its anticompetitive practices and fee increases unchallenged.

NRF said the unusual structure of the settlement gives merchants who oppose it no mechanism to truly opt out. Rather than being able to opt out entirely, retailers would only be able to reject their share of the $7.25 billion offered as compensation for past price fixing, and would remain bound by flawed injunctive relief that would entrench current card industry practices rather than take steps to limit future fee hikes.

While the $7.25 billion figure has been touted as a record antitrust settlement, NRF said it and its members believe effective injunctive relief that would keep fees from rising going forward is more important. The amount represents less than three months’ worth of swipe fee collections despite the eight-year period covered by the lawsuit.

NRF is not a party to the suit, but represents thousands of retailers who would be affected if the case is approved as a class action. Retailers joining NRF in today’s brief included 17 companies and two associations that are not parties to the suit but would be affected: Target Corp., Macy’s Inc., J.C. Penney Corporation Inc., GAP Inc., Limited Brands Inc., Dillard’s Inc., Big Lots Stores Inc., Ascena Retail Group Inc., Neiman Marcus Group Inc., Abercrombie and Fitch Co., Saks Inc., Chico’s FAS Inc., Bob Evans Farms Inc., Papa John’s International Inc., CKE Restaurants Inc., American Signature Inc., Boscov’s Inc., the American Booksellers Association and the National Association of College Stores.


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