Wal-Mart Among Retailers Quitting Visa, MasterCard Deal
Wal-Mart Stores Inc. (WMT) and Starbucks Corp. (SBUX) are among 19 retailers opting out of a $7.25 billion antitrust settlement with Visa Inc. (V) and MasterCard Inc. (MA) over fees charged to merchants to process credit-card transactions.
The proposed settlement would maintain and strengthens an anticompetitive system that allows Visa and MasterCard to fix so-called swipe fees for banks, the companies said today.
“It would allow credit card companies and big banks to perpetuate an unfair and broken system that costs all consumers,” Mike Cook, senior vice president of finance for Wal-Mart, said in a statement.
The settlement, estimated to be the largest-ever U.S. antitrust accord, has drawn criticism from trade associations and retailers contending that it grants the card companies too much leeway to raise rates.
Visa, based Foster City, California, and MasterCard, based in Purchase, New York, agreed to settle the case to resolve the legal battle over interchange fees, which are charged to merchants when customers pay with credit cards.
The settlement received tentative approval from a federal judge in Brooklyn, New York, in November. A hearing on final approval is set for Sept. 12.
The Electronic Payments Coalition, which represents Visa, MasterCard and banks and credit unions that issue payment cards, said it is confident that the objection from the companies will have “no material impact” on final approval.
“These same tired arguments were already raised repeatedly over the course of the litigation,” said a spokeswoman, Trish Wexler. “Had these arguments had any merit or strength, they would have been included in the final settlement.”
K. Craig Wildfang, an attorney for plaintiffs in the case, said the announcement by Wal-Mart and others wasn’t surprising.
“These merchants have been publicly critical of the settlement, and we always thought that many of them were likely to opt out,” said Wildfang, of Robins, Kaplan, Miller & Ciresi LLP. “We remain confident that the vast majority of merchants in the class will not opt out.”
The National Retail Federation said today it will formally oppose the settlement because it gives the card companies “legal blessing to continue their abuse of merchants and consumers indefinitely.”
Bentonville, Arkansas-based Wal-Mart, 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.
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).
To contact the reporter on this story: David McLaughlin in New York at firstname.lastname@example.org