No End to Swipe-Fee Suit After Full-Day Settlement Hearing

An antitrust complaint against Visa and MasterCard will continue, prolonging the eight-year battle, after both proponents and defendants were heard during the fairness hearing Sept. 12.

Many were hoping Judge Gleeson would make a decision either approving or opposing the settlement after the hearing. Visa and MasterCard continued to pursue the $7.25 billion antitrust settlement with U.S. merchants, even after 25% of merchants decided to opt out, a level that would have allowed the card networks to walk away.

After a full day of arguments at the Eastern District of New York courtroom in Brooklyn, U.S. District Judge John Gleeson said there were many useful arguments made and he will take the motion to approve or deny the settlement under advisement.

Proponents say they’ve demonstrated, even with much outside skepticism, that the settlement should be approved. The proponents say merchants will see the advantages of settlement terms such as applying surcharging to credit card transactions. They cited airlines in Australia that have benefitted from surcharging.

But opponents say surcharging isn’t consumer-friendly and there are 11 states that ban the practice, so many merchants wouldn’t be able to mitigate card-acceptance costs by charging customers more for using certain credit card brands.

Some opposing the settlement said the potential value of surcharging is highly uncertain and potentially small.

Plus, many worry that the settlement will protect Visa and MasterCard from future litigation over emerging payment technologies, such as mobile payments. The settlement denies merchants the ability to sue the two card networks over these issues in the future.

Walmart and The Home Depot are among the merchants that objected the settlement.

“Walmart believes the payments market has not functioned competitively for decades,” said Mike Cook, head of Walmart’s payment business, during the hearing. There are “grossly disproportionate advantages for the defendants.”

Other merchants, payments players and industry groups opposing the settlement at the hearing included Consumer Reports, First Data, 7-Eleven, the National Retail Federation and a handful of smaller merchants.

Many were hoping Judge Gleeson would make a decision either approving or opposing the settlement after the hearing. Visa and MasterCard continued to pursue the $7.25 billion antitrust settlement with U.S. merchants, even after 25% of merchants decided to opt out, a level that would have allowed the card networks to walk away.

After a full day of arguments at the Eastern District of New York courtroom in Brooklyn, U.S. District Judge John Gleeson said there were many useful arguments made and he will take the motion to approve or deny the settlement under advisement.

Proponents say they’ve demonstrated, even with much outside skepticism, that the settlement should be approved. The proponents say merchants will see the advantages of settlement terms such as applying surcharging to credit card transactions. They cited airlines in Australia that have benefitted from surcharging.

But opponents say surcharging isn’t consumer-friendly and there are 11 states that ban the practice, so many merchants wouldn’t be able to mitigate card-acceptance costs by charging customers more for using certain credit card brands.

Some opposing the settlement said the potential value of surcharging is highly uncertain and potentially small.

Plus, many worry that the settlement will protect Visa and MasterCard from future litigation over emerging payment technologies, such as mobile payments. The settlement denies merchants the ability to sue the two card networks over these issues in the future.

Walmart and The Home Depot are among the merchants that objected the settlement.

“Walmart believes the payments market has not functioned competitively for decades,” said Mike Cook, head of Walmart’s payment business, during the hearing. There are “grossly disproportionate advantages for the defendants.”

Other merchants, payments players and industry groups opposing the settlement at the hearing included Consumer Reports, First Data, 7-Eleven, the National Retail Federation and a handful of smaller merchants.

by     Bailey Reutzel

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