By Andrew R. Johnson
The National Grocers Association, one of the plaintiffs suing Visa Inc. (V) and MasterCard Inc. (MA) over credit-card transaction fees, said Thursday it opposes the $7.25 billion settlement reached in the case earlier this month.
The trade group, which represents retail and wholesale grocers, is the second party to reject the deal, which would put to bed more than 50 lawsuits filed by merchants against the card networks since 2005. The National Association of Convenience Stores said earlier this month it also opposed the settlement because it failed to address problems it sees in how Visa and MasterCard set their fees.
The National Grocers Association "joined the lawsuit on behalf of its independent retail grocer members over seven years ago to bring about real reform of the anticompetitive credit card swipe fee system," Peter Larkin, president and chief executive officer of the trade group, said in a statement. "This proposed settlement agreement fails in this regard by allowing Visa and MasterCard to continue their dominant anticompetitive practices."
The group said it hired law firm Constantine Cannon LLP, which is also representing the convenience store group, to represent it in the case.
Under the settlement, Visa, MasterCard and numerous large banks that issue their cards agreed to pay more than $6 billion to merchants. The card networks also agreed to temporarily reduce swipe fees, or interchange fees, on credit card transactions and allow merchants to surcharge customers who pay with cards.
Merchants will have the opportunity to opt in or out of the class settlement, which includes a provision allowing Visa and MasterCard to cancel the deal if retailers representing 25% of their credit-card sales volume opt out. Analysts say the likelihood of reaching that threshold is slim.
The grocers group said the ability to surcharge customers includes "burdensome restrictions," which makes it "unlikely that many of NGA's members will be able to make this provision workable."
The settlement has received criticism from Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT), which earlier this week urged merchants to reject the deal.
Spokesmen for Visa and MasterCard did not immediately respond to requests for comment.
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