Discover, Visa and MasterCard settle antitrust suit
NEW YORK (Reuters) - Discover Financial Services Inc (DFS.N) and card networks Visa Inc (V.N) and MasterCard Inc (MA.N) have settled an antitrust lawsuit, sending shares of the fourth-biggest U.S. credit card company up over 14 percent.
In 2004, Discover had filed a lawsuit against MasterCard and Visa seeking roughly $6 billion in damages, as it contended the card networks had harmed its business by preventing their member banks from issuing credit cards for Discover's network.
Visa and MasterCard had already agreed to settle a similar lawsuit with American Express Co (AXP.N) for about $3.9 billion.
Visa, MasterCard and Discover confirmed in separate statements the deal and said they were working on the specific terms of the settlement.
"Terms of the settlement will be available following completion of the deal," Discover said in a statement.
The agreement had been previously disclosed to Reuters by a clerk for Judge Barbara Jones in U.S. District Court. Jury selection starting on Tuesday for a trial before Jones had been canceled.
U.S. courts have ruled that efforts by Visa and MasterCard, the world's two biggest credit card companies, to restrict banks from working with rivals was anti-competitive and broke antitrust law.
Visa had placed $3 billion into a U.S. litigation escrow account with net proceeds from its March initial public offering -- funds that were withheld from its U.S. member banks' distribution in the IPO.
The world's largest card network has said the account was used to pay $2.1 billions to American Express and would be used to pay for any future settlement in other related litigation.
"This settlement is covered by the company's retrospective responsibility plan, a mechanism for addressing potential liability in certain Visa litigation," Visa said.
Shares of Discover were up 14.3 percent to $12.12, while MasterCard was up 3 percent to $178.76. Visa stock was down 0.6 percent to $58.54 in afternoon trading on the New York Stock Exchange.