Restaurants oppose $7.2 billion credit-card fee settlement
NEW YORK (Reuters) - The National Restaurant Association said Tuesday it is joining the opposition to a proposed $7.2 billion settlement between some retailers and Visa Inc and MasterCard Inc over fees for credit card transactions.
The NRA, which represents the $600 billion U.S. restaurant industry, is the last of six trade groups leading the case to weigh in on the potentially historic settlement.
The trade group's chief concern is that the settlement would prohibit all merchants that use Visa and MasterCard - whether they decide to opt in or opt out of the settlement - from filing future lawsuits over interchange issues.
"There is strong concern that the proposed settlement agreement will not achieve the litigation's most critical goal - to fundamentally change a broken marketplace in which swipe fees are set," NRA President and Chief Executive Dawn Sweeney said in a statement.
NRA's board of directors unanimously voted to throw the trade group's weight behind the opposition amassing against the settlement, the group said. While the group has been pushing for reforms that would bring transparency to the interchange system and help lower costs for restaurants, the proposed settlement accomplishes neither, it said.
The antitrust settlement was announced in July and requires the approval of U.S. District Judge John Gleeson in Brooklyn, New York, a process that could stretch well into 2013. If it does receive approval, the settlement would be the largest of its kind in U.S. history, resolving a seven-year-old lawsuit accusing Visa and MasterCard of conspiring with major banks to artificially inflate swipe fees.
Under the proposed deal, the credit card companies and banks have offered to pay $6 billion and to temporarily reduce swipe fees, also known as interchange fees, to save stores about $1.2 billion over an eight-month period.
While the settlement has won approval from grocers like Kroger Co and Safeway Inc, it is being fought by heavyweights like the National Retail Federation (NRF), retailer Wal-Mart Stores Inc, global coffee chain Starbucks Corp and a variety of other industry groups representing everything from truck stop operators and convenience stores to pharmacies to smaller supermarkets.
In its statement earlier this month, the NRF called the deal "a lose-lose-lose for merchants, consumers and competition," and said the deal would allow swipe fees, the amount paid to process credit and debit card transactions, to rise unchecked.
Opponents of the settlement say the $7.2 billion is a small amount of compensation for the billions of dollars they pay each year in interchange fees.
"If you're going to opt in to the class, you can be bound by the terms. But, if you are not going to opt in to the class, you should not be," Scott DeFife, NRA's executive vice president for policy and government affairs, told Reuters.
The credit card companies and lead lawyers appointed by the court to represent stores say they are confident that the settlement will receive the court's approval. Trish Wexler, spokeswoman for the Electronic Payments Coalition, which represents Visa and Mastercard, said the NRA had a hand in the settlement process and is now just trying to "go back for seconds."
"Instead of accepting the benefits of the settlement, these groups want even more, and will clearly never be satisfied," Wexler said.
The groups are due back in court Thursday for a status conference. 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 Steve Orlofsky)
- Malaysia air probe finds scant evidence of attack: sources |
- Search widened as Malaysia air probe finds scant evidence of attack |
- Confrontation in Ukraine as diplomacy stalls |
- Exclusive: Chinese raw materials also found on U.S. B-1 bomber, F-16 jets
- Freescale loss in Malaysia tragedy leads to travel policy questions