(Corrects paragraph 8 to say Richard Arnold represents stores
supporting the settlement, not those opposing it.)
By Jessica Dye
Nov 9 A U.S. judge on Friday granted preliminary
approval to a proposed $7.2 billion settlement between merchants
and Visa Inc and Mastercard Inc over credit card
fees, despite objections from hundreds of retailers, including
Wal-Mart Stores Inc.
If the deal receives final approval from U.S. District Court
Judge John Gleeson of Brooklyn, New York, it would be the
largest federal antitrust settlement in U.S. history, offering
nearly 8 million merchants $7.2 billion in cash and temporary
reductions in the interchange, or swipe fees, they pay to
process credit and debit transactions.
Visa and Mastercard agreed to amend their no-surcharge
policies within 60 days of preliminary approval of the deal,
allowing merchants to charge customers extra for paying by
credit or debit, although that will be restricted by state law.
The stores that take Visa and Mastercard will be
provisionally certified for settlement purposes and notified of
their legal rights. Full terms of the deal will not take effect
unless Gleeson gives final approval, which Visa and Mastercard
say they believe will occur. The judge will hold a hearing to
give objectors a chance to weigh in before then, although no
date has yet been set.
The $1.2 billion in temporary swipe-fee relief will take
effect shortly after class members have been given an
opportunity to opt out of receiving the monetary damages, even
if the deal never receives final approval, according to
During a packed hearing on Friday, lawyers for dozens of
objectors -- including Target Corp and Home Depot Inc
-- told the judge that the settlement offered meaningless
relief for merchants saddled with an estimated $30 billion in
annual swipe fees. They also argued that releases shielding Visa
and Mastercard from new litigation over the same claims would
violate their legal rights and give the two companies protection
from for any future anti-competitive behavior. No opt-out
mechanism is provided for the no-surcharge rules or litigation
Lawyers for several dozen stores that support the pact --
which include major grocery chains Kroger Co and Safeway
Inc -- told Gleeson that these concerns were based on
"It's a lot of smoke and there's very little fire," said
Richard Arnold, who represents t hose supporters.
Gleeson called the initial objections "overstated" but noted
that the legal standard for final approval would be much higher.
Gleeson has yet to schedule a hearing on final approval.
"I don't mean to suggest there aren't a number of issues
that are going to require significant scrutiny," he said.
Gleeson said he was considering whether to appoint an
independent expert to help him understand the economic impact of
the changes to Visa and Mastercard's no-surcharge rules.
Visa general counsel Josh Floum said the company looked
forward to bringing "closure" to the case, after seven years of
litigation, including two years of settlement talks.
"While we recognize some merchants may have different
opinions, the settlement represents a solution reached after
years of litigation and months of negotiation," said Mastercard
general counsel Noah Hanft.
Objecting merchants said they were prepared to keep
"This is the beginning of a long process, and we're not
remotely deterred by what happened today," said Jeff Shinder, a
lawyer for 10 of the 19 original plaintiffs who have rejected
Mallory Duncan, general counsel for the National Retail
Federation, one of the largest U.S. trade associations for
retailers, said it was considering its legal options.
"This proposal benefits no one but lawyers and credit card
companies, and should not be forced on the retail industry or
retailers' customers," he said.
(Reporting by Jessica Dye in New York; Writing by Brad Dorfman
and Jessica Dye; Editing by Leslie Adler, David Gregorio and Dan