UPDATE 1-Audi opens Mexico plant to make Q5 SUV
SAN JOSE CHIAPA, Mexico, Sept 30 German car maker Audi inaugurated on Friday a new plant in Mexico, where it will build the new Audi Q5 SUV.
By Andrew Longstreth
NEW YORK Dec 13 A U.S. federal judge on Friday approved an estimated $5.7 billion class action settlement between merchants and Visa Inc and MasterCard Inc over credit card fees despite objections from thousands of retailers who complained it was inadequate.
The settlement is believed to be the largest in a U.S. antitrust class action.
Merchants first sued Visa and MasterCard in 2005, accusing the two companies of fixing the fees charged to merchants each time their customers used their credit or debit cards. They were accused also of preventing merchants from steering customers to cheaper forms of payments.
U.S. District Judge John Gleeson of Brooklyn, New York, approved the settlement in a written order. He also dismissed some of the objections made by merchants opposed to the deal as hyperbole.
At a fairness hearing in September, he noted that one objector cast Visa and MasterCard as Nazis.
"I conclude that the proposed settlement secures both a significant damage award and meaningful injunctive relief for a class of merchants that would face a substantial likelihood of securing no relief at all if this case were to proceed," Gleeson wrote.
The value of the settlement, reached last year, decreased to $5.7 billion from roughly $7.2 billion after thousands of merchants opted out of the deal, according to Craig Wildfang, an attorney for the plaintiffs.
Mallory Duncan, general counsel for the National Retail Federation, which opposed the settlement, said in a statement that her organization was reviewing Gleeson's ruling and expected to file an appeal.
"The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense," she said.
The settlement provides for cash payments to merchants nationwide and lets them begin charging customers an extra fee when they use Visa or MasterCard credit cards.
For Visa and MasterCard, Gleeson's decision could go a long way to alleviate a major legal headache that has plagued them for more than a decade.
In 2003, two years before the current case started, Visa and MasterCard settled a similar case with merchants over rules governing the use of their cards.
Visa Chief Executive Officer Charlie Scharf said in a statement that the company "realized a significant achievement in our efforts to resolve the long-standing legal differences between merchants and the payments industry."
MasterCard general counsel Noah Hanft called Gleeson's decision "an important milestone in putting this litigation behind us," according to a statement.
Approval of the current settlement has been opposed by many of the largest players in the retail industry.
Around 8,000 merchants, accounting for about 25 percent of the transactional volume at issue in the case, opted out of the settlement.
Among those opting out were the largest retailers in the United States, including Wal-Mart Stores Inc, Amazon.com Inc, and Target Corp.
Those businesses have complained about a broad litigation release in the settlement. The release forces all merchants who accepted Visa or MasterCard, and even those who will in the future, to give up their right to sue the credit card companies over rules at issue in this case or similar ones they may make in the future.
Those objectors also argued that the settlement offered meaningless reforms that would not help them control the costs of accepting credit cards.
Under certain circumstances, the settlement allows merchants to charge customers extra if they use Visa or MasterCard credit cards. But critics of the deal point out that those opportunities are extremely limited, and certain states prohibit such surcharging. The critics also say that merchants are unlikely to take advantage of surcharging for fear of upsetting consumers or losing them to competitors that do not impose a surcharge.
Many retailers who opted out of the settlement have filed their own lawsuits.
The case is In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, U.S. District Court for the Eastern District of New York, No. 05-1720.
WASHINGTON, Sept 30 Volkswagen AG confirmed late Friday it will make $1.21 billion in payments to 652 U.S. brand dealers as part of its $16.5 billion diesel emissions settlement to date.
* Termination of acquisition agreement to acquire Promitheas Interest'l Ltd.