Visa, MasterCard $7.25 billion settlement with retailers is thrown out
By Jonathan Stempel
NEW YORK (Reuters) - A federal appeals court on Thursday threw out a $7.25 billion antitrust settlement reached by Visa Inc (V.N: Quote) and MasterCard Inc (MA.N: Quote) with millions of retailers that accused the card networks of improperly fixing credit and debit card fees.
The 2nd U.S. Circuit Court of Appeals in New York said the accord was unfair to retailers that stood to receive no payments and, in the court's view, little or no benefit at all. It also decertified the case as a class action.
"This is not a settlement; it is a confiscation," wrote Circuit Judge Pierre Leval, a member of the three-judge panel that unanimously struck down the settlement.
The deal had been the largest all-cash U.S. antitrust settlement, though its value shrank to about $5.7 billion after roughly 8,000 retailers "opted out."
Thursday's decision is a blow to the credit card industry, which hoped the settlement would end a decade of litigation brought on behalf of about 12 million retailers against Visa, MasterCard and banks that issue their cards.
It was intended to resolve claims that merchants were overcharged on interchange fees, or swipe fees, when shoppers used credit or debit cards, and were barred from directing customers toward cheaper means of payment.
The settlement may now need to be renegotiated, or the case could go to trial.
"Swipe fees are an improper and unnecessary hidden tax on consumers," said Jeffrey Shinder, a Constantine Cannon partner representing Amazon.com Inc (AMZN.O: Quote), Costco Wholesale Corp COST.O, Wal-Mart Stores Inc (WMT.N: Quote) and other opponents of the accord. "The structure of swipe fees is back on the table." Continued...