Visa, Mastercard ask U.S. court to declare card fees are lawful

Fri May 24, 2013 5:41pm EDT
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By Jessica Dye

NEW YORK (Reuters) - Visa Inc and MasterCard Inc, opening another front in an eight-year battle over credit card fees paid by retailers, on Friday asked a federal judge to declare that the fees do not violate antitrust law.

The lawsuit seeks to give the card companies legal ammunition against some retailers who are trying to opt out a proposed settlement under which they would receive a share of $7.2 billion in cash and fee discounts from the card companies.

The complaint filed Friday in Brooklyn federal court by the credit card giants and a number of banks that issue their cards asks U.S. District Judge John Gleeson to declare that interchange, or swipe, fees are lawful and pro-competitive.

On Thursday, Target Corp and other retailers, including JC Penney and Kohl's, broke away from the pact. The retailers filed a lawsuit in Manhattan federal court against the credit card companies alleging past antitrust violations and seeking damages.

The proposed settlement would end eight years of litigation by merchants who accused Visa and Mastercard of inflating swipe fees.

Friday's complaint was brought against retailers and trade groups who were named plaintiffs in the swipe fee litigation, but later opted out. If Gleeson rules that the swipe fees do not violate antitrust law, it could prevent them from pursuing separate damage actions.

It could also affect the ability of other retailers who opt out to seek damages over swipe fees.

"A declaration in plaintiffs' favor against the defendants is necessary to prevent the continuation of endless, wasteful litigation between defendants and plaintiffs," the complaint on Friday said.   Continued...

An employee stands behind a MasterCard logo during the launch of the international credit card issuer's first ATM transaction in Myanmar, in Yangon November 15, 2012.REUTERS/Soe Zeya Tun