BROOKLYN, N.Y. -- Plaintiffs in the lawsuit against Visa Inc. and MasterCard Inc. over interchange or "swipe" fees have until October 19 to formally submit approval of a more than $6 billion antitrust settlement, according to a filing unsealed in Brooklyn, N.Y., federal court, reported Bloomberg.
U.S. Magistrate Judge James Orenstein ordered that the agenda be made public following a hearing on the status of the case, which was the first court appearance since the settlement was unveiled last month.
The deal, which would settle allegations of swipe-fee price-fixing, promises to provide merchants with cash payments as well as a temporary reduction in interchange fees and the potential for surcharges to cover future interchange costs.
Opposition to the accord has grown over the past few weeks, with groups including the National Association of Convenience Stores (NACS), the National Cooperative Grocers Association (NCGA) and retail giants Wal-Mart Stores Inc. and Target Corp. issuing statements saying the settlement doesn't do enough for merchants.
Other groups and retailers coming out in opposition have included the Society of Independent Gasoline Merchants of America (SIGMA), the Texas Food & Fuel Association (TFFA), the Georgia Association of Convenience Stores (GACS), Louisville, Ky.-based Thorntons Inc. and Anderson, Ind.-based Ricker Oil Co. (click here for previous CSP Daily News coverage).
"The proposed settlement … does not make meaningful changes to the broken credit-card swipe fee market, and it broadly restricts merchants' rights to challenge the card industry's anticompetitive practices in the future, GACS said in a statement that reflects the same sentiments of statements issued by the other groups
"The proposal offers no long-term relief for retailers or consumers from increasing swipe fees or from unfair credit card network rules and it will not keep the card networks from continuing to raise swipe fees. …. GACS merchant members have been fighting for years to bring real competition and transparency to the credit-card market. The proposed settlement does not achieve those objectives.
"Rather than accept this flawed settlement, GACS urges everyone in the merchant community, including those representing the class of merchants around the nation, to work toward a real solution to the problem caused by the card companies' anticompetitive conduct."
GACS Chairman Neal Anderson of Glennville, Ga-based Clyde's Markets, said, "The proposed settlement does not address the competition and transparency issues that were a major driving force in bringing the original legal action. For receiving the equivalent of a couple of month's swipe fees, merchants are being asked to go back and operate in the same old price-fixing environment that would continue to be operated by Visa and MasterCard. Clearly, we can do better than what is currently on the table"
GACS President Jim Tudor added, "The proposed settlement does nothing to address the transparency and competitive issues that have resulted in merchants having to pay amongst the highest interchange rates in the developed world. The ultimate result is that … consumers are stuck with these hidden fees that hit their pocketbook each and every day."
"We are making progress and getting the underlying documents drafted," K. Craig Wildfang, an attorney for the plaintiffs, said in court regarding a motion for approval of the settlement. "We are going as fast as we can. Not as fast as we would like."
NACS and NCGA plan to fight the settlement in court, Jeffrey Shinder, a lawyer for the groups, told the news agency. "There are serious issues with the settlement," he said."The trade association named plaintiffs who came out against it, all of the members of their boards--flesh and blood merchants--voted against it."
NACS, which issued its statement within minutes of the settlement's disclosure on July 13, said the deal amounts to only two months' worth of the approximately $50 billion in swipe fees collected annually by payment networks. The deal also doesn't prevent Visa or MasterCard from raising fees in the future, the group said. Other measures under the deal would only be allowed under strict oversight of Visa and MasterCard, making them "unworkable" for merchants, the group said.
Target said in a statement that the proposed settlement would "perpetuate a broken system." Visa Chairman and CEO Joseph Saunders told investors in a conference call on July 25 that he expected a federal judge to grant preliminary approval to the settlement in the fall. The court must also grant final approval to the deal before it can be implemented.
The accord followed a seven-year legal battle, according to lawyers for the plaintiffs.
"This settlement agreement is the result of seven years of negotiation which makes us confident that the court will agree that this is fair to all parties," Trish Wexler, a spokesperson for the Electronic Payments Coalition, which favors the deal, told Dow Jones. "The recent statements that we've heard from a handful of retailers are nothing new and have already been considered during the course of this long negotiation.
The case is In re Payment Card Interchange Fee & Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).
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