Mastercard, Visa Agree to Settle Antitrust Suit -- WSJ
September 19 2018 - 3:02AM
Dow Jones News
By Kimberly Chin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 19, 2018).
Mastercard Inc., Visa Inc. and other financial institutions have
agreed to settle a long-running antitrust lawsuit with merchants
over the fees they pay when they accept card payments for a
proposed settlement amount of about $6.2 billion.
The proposed amount includes $900 million from all of the
defendants, including a number of banks that issue debit and credit
cards, including JPMorgan Chase & Co., Citigroup Inc., and Bank
of America Corp. It also includes roughly $5.3 billion already paid
by the defendants as part of a $7.25 billion settlement reached in
2012.
Visa's share of the new settlement is $600 million, which it
said it set aside for the settlement on June 28. Including the 2012
settlement money, Visa's share is $4.1 billion.
Mastercard has agreed to pay an additional $108 million on top
of the $790 million it had agreed to pay in a settlement in
2012.
The merchants also allege that the card networks have
intentionally set fees and card acceptance rules that primarily
benefit the banks. The merchants argue that they want the ability
to negotiate their own fees directly with the banks instead of
through card networks like Visa and Mastercard, which settle the
fees with the banks independently.
The defendants involved in the case said that part of the suit
that seeks to revise network rules isn't covered by Tuesday's
settlement and won't result in any immediate action while the
parties engage in negotiations.
The settlement Tuesday, which was originally reported by The
Wall Street Journal in June, would still be subject to court
approval.
This could cap a long-running class-action lawsuit that was
brought by merchants in 2005 against Visa, Mastercard and the
largest U.S. card-issuing banks.
When the original $7.25 billion settlement was reached in 2012,
many large merchants opted out largely due to terms that would have
barred them from filing lawsuits against the networks over future
swipe-fee increases. An appeals court invalidated that settlement
on the grounds that merchants weren't adequately represented. The
Supreme Court last year declined to hear the case, shifting it back
to the district court.
In this case as well, Mastercard and Visa said they expect to be
relieved of all future monetary claims alleged by the class-action
suit related to the company's interchange and fee structure, as
well as merchant acceptance rules for at least a period of five
years after resolution of appeals.
The card networks have come under scrutiny in particular over
the fees they charge merchants when a consumer swipes a card, known
as interchange fees, after each transaction. The card networks set
the fee and the merchants pay the banks. Yet the merchants in the
suit allege that the networks and banks have colluded to inflate
those fees.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
September 19, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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