(Corrects paragraph 7 to say litigation releases are binding
even for merchants who opt out of the settlement)
By Jessica Dye
NEW YORK, April 10 A major retail trade
association said Wednesday it will reject a proposed $7.2
billion settlement with credit-card giants Visa Inc and
Mastercard Inc over card fees, calling it a "bad deal"
for nearly 8 million U.S. merchants.
The Retail Industry Leaders Association, or RILA, said it
intends to "make a statement" by opting out of the potentially
historic settlement just as lead lawyers for the plaintiffs and
credit-card companies are preparing to file papers seeking final
approval from a federal judge in Brooklyn, N.Y.
RILA represents some of the largest U.S. retailers,
including Walmart Stores Inc, Target Corp and
Home Depot Inc, all of which have previously expressed
dissatisfaction with the proposed settlement.
The move could prompt a new round of criticism of the deal
from large U.S. retailers and possibly more opt-outs. The credit
card companies believe they have a judge's backing in the
settlement, but a high number of opt-outs could imperil the
The proposed settlement, announced last year, would resolve
an eight-year old lawsuit on behalf of U.S. merchants accusing
Visa and Mastercard of artificially raising interchange, or
swipe, fees, which are paid to process credit-card transactions.
The settlement includes a $6.05 billion payment and $1.2 billion
in temporary swipe-fee reductions, as well as changes to Visa
and Mastercard rules to allow merchants to charge customers
extra for using certain cards.
U.S. District Judge John Gleeson has already given
preliminary approval to the proposal, potentially the largest
private antitrust settlement in U.S. history. Nearly 8 million
stores, restaurants and other merchants that accept credit cards
have been given until May 28 to opt out or object to the deal.
If merchants opt out, they will not be eligible to receive a
portion of the monetary damages. But they note that they will be
bound by parts of the settlement that would prohibit them from
suing Visa and Mastercard over similar interchange issues in the
future, if the settlement is approved.
RILA general counsel Deborah White said that the group is
opting out of the settlement on its own behalf, and that each of
its members will have to decide individually whether to object,
opt out, or stay in the litigation.
"We do have the support from a large majority of our
membership for opting out and objecting, and we want to make
sure we're shedding light on what the true ramifications are for
the proposed settlement," White said in an interview.
The group believes that the litigation releases in the
settlement will force merchants to forego future legal claims
against Visa and Mastercard in exchange for "paltry" monetary
relief over years of harm from swipe fees, which have cost
merchants billions of dollars, White said.
RILA is among the first major trade groups to come out
swinging against the deal, which drew a flurry of opposition at
the preliminary approval stage last year. The National Grocers
Association said in February that it would opt out, and urged
its members to do the same.
Visa, Mastercard and a lawyer for lead plaintiffs supporting
the settlement did not immediately respond to requests for
comment Wednesday evening.
Trish Wexler, a spokeswoman for the Electronic Payments
Coalition, which represents the payment card industry, said she
remained "highly confident that this (settlement) will be
approved, and that the interchange fee battle will finally come
to an end."
A hearing on final approval is set for September.
(Reporting by Jessica Dye; Editing by Andrew Hay)