Target Leads Retailers in Suit Against MasterCard, Visa
Stock Chart for Visa Inc (V)
Target Corp. (TGT) and Macy’s Inc. (M) joined with 15 other retailers in suing Visa Inc. and MasterCard Inc. (MA) over credit-card and debit-card fees after dropping out of a multibillion-dollar settlement of a similar case.
The biggest U.S. payment card firms illegally restrained competition for interchange fees by setting default rates and imposing almost identical rules for accepting cards, the retailers said yesterday in a federal court complaint in New York.
In the previous antitrust suit pending in Brooklyn federal court, dozens of large retailers including Target and Macy’s opposed a $7.25 billion proposed settlement, alleging it gave Visa and MasterCard too much freedom to raise rates in the future.
“Plaintiffs have paid and continue to pay significantly higher costs to accept Visa-branded and MasterCard-branded credit and debit cards than they would if the banks issuing such cards competed for merchant acceptance,” lawyers for the retailers said in yesterday’s complaint.
Visa, based in Foster City, California, and MasterCard, based in Purchase, New York, are former joint ventures of major banks that now act as agents of financial institutions that retain some ownership of the card companies, the retailers alleged.
Besides Target and Macy’s, the retailers that sued yesterday are TJX Cos. Inc., Kohl’s Corp. (KSS), Staples Inc. (SPLS), J.C. Penney Co. Inc. (JCP), Office Depot Inc. (ODP), L Brands Inc., Office Max Inc. (OMX), Big Lots Stores Inc., Abercrombie & Fitch Co. (ANF), Ascena Retail Group Inc. (ASNA), Saks Inc. (SKS), Bon-Ton Stores Inc. (BONT), Chico’s FAS Inc. (CHS), Luxottica Group SPA (LUX) and American Signature Inc.
The settlement in Brooklyn, estimated to be the largest-ever U.S. antitrust accord, was intended to cover more than 7 million retailers nationwide. Several retail trade associations also opposed the accord and encouraged other merchants to do the same.
The settlement received tentative approval from U.S. District Judge John Gleeson in November. A hearing on final approval is set for Sept. 12.
A spokeswoman for the Electronic Payments Coalition, which represents Visa, MasterCard and banks and credit unions that issue payment cards, said “no one is surprised” by the retailers’ new lawsuit.
“They were saying they were going to do this for nearly a year now,” Trish Wexler, the spokeswoman, said in a phone interview. “I find it hard to understand why they think they could do any better with a new lawsuit using the same old arguments that they’ve already exhausted over the course of this litigation.”
The coalition is confident that the settlement will receive final approval, she said.
A MasterCard spokesman, James Issokson, said in an e-mail that the firm is also confident that Gleeson will sign off on the deal. Paul Cohen, a Visa spokesman, declined to comment immediately.
K. Craig Wildfang, a lead lawyer for plaintiffs in the settlement, said the new suit probably won’t have a significant impact on approval. The credit card companies and other defendants might ask to have the new suit transferred to Gleeson in Brooklyn, he said.
The new case is Target Corp. v. Visa Inc. (V), 1:13-cv-03477, U.S. District Court, Southern District of New York (Manhattan). The previous case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).
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