The settlement is believed to be the largest in a U.S. antitrust
Merchants first sued Visa and MasterCard in 2005, accusing the two
companies of fixing the fees charged to merchants each time their
customers used their credit or debit cards. They were accused also
of preventing merchants from steering customers to cheaper forms of
U.S. District Judge John Gleeson of Brooklyn, New York, approved the
settlement in a written order. He also dismissed some of the
objections made by merchants opposed to the deal as hyperbole.
At a fairness hearing in September, he noted that one objector cast
Visa and MasterCard as Nazis.
"I conclude that the proposed settlement secures both a significant
damage award and meaningful injunctive relief for a class of
merchants that would face a substantial likelihood of securing no
relief at all if this case were to proceed," Gleeson wrote.
The value of the settlement, reached last year, decreased to $5.7
billion from roughly $7.2 billion after thousands of merchants opted
out of the deal, according to Craig Wildfang, an attorney for the
Mallory Duncan, general counsel for the National Retail Federation,
which opposed the settlement, said in a statement that his
organization was reviewing Gleeson's ruling and expected to file an
"The settlement permanently ties the hands of thousands of
businesses who wanted nothing to do with this misguided case, and a
decision to approve it violates established law and common sense,"
The settlement provides for cash payments to merchants nationwide
and lets them begin charging customers an extra fee when they use
Visa or MasterCard credit cards.
For Visa and MasterCard, Gleeson's decision could go a long way to
alleviate a major legal headache that has plagued them for more than
In 2003, two years before the current case started, Visa and
MasterCard settled a similar case with merchants over rules
governing the use of their cards.
Visa Chief Executive Officer Charlie Scharf said in a statement that
the company "realized a significant achievement in our efforts to
resolve the long-standing legal differences between merchants and
the payments industry."
[to top of second column]
MasterCard general counsel Noah Hanft called Gleeson's decision "an
important milestone in putting this litigation behind us," according
to a statement.
Approval of the current settlement has been opposed by many of the
largest players in the retail industry.
Around 8,000 merchants, accounting for about 25 percent of the
transactional volume at issue in the case, opted out of the
Among those opting out were the largest retailers in the United
States, including Wal-Mart Stores Inc <WMT.N>, Amazon.com Inc <AMZN.O>,
and Target Corp <TGT.N>.
Those businesses have complained about a broad litigation release in
the settlement. The release forces all merchants who accepted Visa
or MasterCard, and even those who will in the future, to give up
their right to sue the credit card companies over rules at issue in
this case or similar ones they may make in the future.
Those objectors also argued that the settlement offered meaningless
reforms that would not help them control the costs of accepting
Under certain circumstances, the settlement allows merchants to
charge customers extra if they use Visa or MasterCard credit cards.
But critics of the deal point out that those opportunities are
extremely limited, and certain states prohibit such surcharging. The
critics also say that merchants are unlikely to take advantage of
surcharging for fear of upsetting consumers or losing them to
competitors that do not impose a surcharge.
Many retailers who opted out of the settlement have filed their own
The case is In Re Payment Card Interchange Fee and Merchant Discount
Antitrust Litigation, U.S. District Court for the Eastern District
of New York, No. 05-1720.
(Reporting by Andrew Longstreth; editing by Howard Goller, Gary
Hill, Jan Paschal and Bob Burgdorfer)
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