Retail trade group plans to fight swipe fee settlement
NEW YORK |
NEW YORK (Reuters) - The National Retail Federation plans to fight a $7.2 billion settlement between some retailers and Visa Inc (V.N) and MasterCard Inc (MA.N) over transaction fees paid to the credit card companies.
The world's largest retail trade organization said on Tuesday that the proposed settlement did not stop what it calls anti-competitive behavior by the credit card companies. The group said the deal would allow swipe fees, the amount paid to process electronic transactions involving credit and debit cards, to rise while barring further legal challenges.
"The proposal is a lose-lose-lose for merchants, consumers and competition," NRF President Matthew Shay said in a statement. "NRF will take any and all steps necessary to oppose the settlement as it is currently proposed and will work toward real reform of the swipe fee system."
The trade group said it was exploring what forms of legal action to take.
The antitrust settlement, announced in July and requiring the approval of U.S. District Judge John Gleeson in Brooklyn, New York, would be the largest in U.S. history. It would resolve a 7-year-old lawsuit accusing Visa and MasterCard of conspiring with major banks to artificially inflate swipe fees.
As part of the pact, the credit card companies have offered to pay $6 billion and temporarily reduce swipe fees, also known as interchange fees, to save stores about $1.2 billion over an eight-month period, according to court papers.
Despite support from Visa and MasterCard, the settlement has received a frosty reception from other retail trade associations and big retailers including Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N).
At a court hearing on Tuesday, attorneys for the plaintiffs, who are U.S.-based retailers, said they remain on target to file for preliminary approval of the accord by October 12.
After the hearing, Craig Wildfang, co-lead counsel for the plaintiffs, said that he was unconcerned by the NRF's opposition and said it would be up to the judge to approve the settlement, not the retailers.
"The court decides whether the requisites are met for approval," Wildfang said. "This isn't about counting noses."
The settlement would allow stores to charge customers extra if they pay with credit cards, although that ability would be limited by state law and stores' agreements with other card companies, such as American Express Co (AXP.N).
The settlement would also give merchants the right to negotiate collectively over swipe fees and would include broad releases shielding Visa and MasterCard from future litigation over similar issues, court papers showed.
The deal had drawn earlier opposition from the National Association of Convenience Stores and trade groups representing grocers and pharmacies.
Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a trade association that represents Visa and Mastercard, called objections to the pact a "politically motivated" attempt to wrangle more concessions on swipe fees, both in the courtroom and before Congress.
"We remain confident that the courts will approve this settlement agreement, particularly considering the years of negotiation and careful review of all evidence from both sides that has already been considered," she said.
Under the terms of the settlement, retailers can opt out of the damages provision, but not the injunctive relief, including the litigation releases and ability to impose surcharges on credit-card transactions.
The case is In re Payment Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, No. 05-1720.
(Editing by Lisa Von Ahn and Leslie Gevirtz)
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