Visa, MasterCard Swipe Deal Draws Little Rock Objection
Little Rock, Arkansas, objected to a multibillion-dollar settlement of a price-fixing case against Visa Inc. (V) and MasterCard Inc. (MA) over the fees charged to merchants to process credit-card transactions.
The settlement doesn’t address potential future fixing of the so-called interchange or swipe fees and contains “unacceptable obligations,” City Manager Bruce T. Moore said in a filing today in federal court in Brooklyn, New York, where the agreement is under review.
The proposed $7.25 billion settlement, estimated to be the largest-ever U.S. antitrust accord, has drawn criticism from trade associations and retailers, which contend that it grants the card companies too much leeway to raise rates in the future.
Bentonville, Arkansas-based Wal-Mart Stores Inc. (WMT), the world’s largest retailer, said in a statement in July that it was “disappointed” in the settlement and would encourage merchants to reject the deal.
Little Rock, the state capital and home to department-store chain Dillard’s Inc. (DDS), said it was protesting the settlement in its capacity as a potential member of a class that has accepted Visa and MasterCard credit-card payments.
Separately, the city of Oakland, California, also filed an objection to the settlement today. The city, which also accepts credit-card payments, said the accord “explicitly permits Visa and MasterCard to continue to fix interchange fees for their banks,” forcing consumers to pay higher prices.
“Interchange fees on credit card transactions result in higher prices for Oakland’s residents, and amount to a hidden and regressive tax on goods and services,” the city said in its objection, filed by attorney Jeffrey Shinder, who is also representing several trade associations that oppose the deal.
Hundreds of objections have been filed since U.S. District Judge John Gleeson gave a preliminary sign-off to the deal in November, including many from smaller retailers and merchants.
Last month, Gleeson ordered that corrections be made to websites established by groups opposing the settlement, including Merchantsobject.com, which directed business owners to pages where they could submit objections electronically. The judge said that the sites were misleading and failed to prominently display a link to a court-approved website, paymentcardsettlement.com.
At a follow-up hearing earlier this month, Gleeson said he would consider remedies for merchants that dropped out of the settlement, leaving them unable to receive payments for damages, based on what he described as misleading information on the sites.
The settlement was unveiled in July after about seven years of litigation. A hearing on final approval of the deal, which would cover merchants throughout the U.S., is scheduled for Sept. 12.
The 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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