Judge denies $30 billion antitrust settlement between Visa and Mastercard

Taylor Giorno and the Hill

14 hours ago

(The Hill) – A federal judge on Tuesday threw out a $30 billion antitrust settlement between Visa, Mastercard and a select group of retailers that was condemned by the larger industry.

Visa and Mastercard, which together control 80 percent of the credit card network market, agreed in March to limit the interface fees charged to retailers that accept their cards.

As part of a tentative agreement that required judge approval, the credit card giants agreed to phase out the so-called swipe fees by at least 4 basis points for at least three years and capping their fees at 2023 levels for the following year. five years.

The entire order appears to have been sealed, but according to the record in the case, “The Court finds that final approval of the Settlement is unlikely to be granted and therefore denies Plaintiffs’ motion for preliminary approval of the Settlement.”

“As we noted earlier this month, we are disappointed with this development. We believe the settlement provided a fair resolution to this long-standing dispute, primarily by providing business owners with greater flexibility in managing their card acceptance activities,” Seth Eisen, senior vice president of communications at Mastercard, told The Hill.

Eisen also said Mastercard would look for other options to resolve the long-running legal problem.

Visa did not immediately respond to The Hill’s request for comment.

In March, retail industry groups sharply criticized the proposed agreement over concerns that the agreement would provide only temporary relief from a systemic problem.

“Thankfully, the judge made the right decision in recognizing what a bad deal this would be for Main Street retailers and their customers. “The judge’s rejection of the settlement at the preliminary stage is extremely unusual and shows how much the Visa and Mastercard proposal missed the mark,” said Christopher Jones, director of government relations and counsel at the National Grocers Association and a board member of the Merchants Payments Coalition ( MPC).

Retailers pay an average 2.24 percent fee for each credit card swipe, though fees can be as high as 4 percent, according to the National Retail Federation, an MPC member, which says card swipe fees are typically the largest operating cost for retailers after labor costs.

“The credit card payment market has been broken for decades. “Leading retailers are grateful that Judge Brodie saw through the façade of the proposed settlement and understood that it would not deliver the significant change that is needed to correct competitive imbalances in the interchange ecosystem,” said the Retail Industry Leaders Association.

Retailers also called on Congress to pass the Credit Card Competition Act, a contentious bill sponsored by Sens. Dick Durbin (Illinois) and Roger Marshall (Illinois), which the credit card industry vehemently opposed.

The bill would require financial institutions with more than $100 billion in assets to offer at least two network options – including at least one other than Visa or Mastercard – to process credit card transactions.

Critics say the bill would enrich big box stores, threaten card security and eliminate popular rewards programs. Supporters say the bill will bring much-needed competition that will break the Visa-Mastercard duopoly.

“At this point, the only way to provide real relief and fix the broken payments market is for Congress to pass the Credit Card Competition Act,” Jones said.

A Visa spokesperson pointed out to The Hill the company’s June 13 comment: “We continue to believe that the proposed settlement was the appropriate resolution, resulting from long and thoughtful discussions with the merchant class.”

Updated at 2:02 p.m. ET.