On Friday, October 19, the nine remaining class plaintiffs submitted a revised proposed $7.25 billion settlement of a federal antitrust lawsuit over skyrocketing Visa and MasterCard credit card swipe fees to the court for preliminary approval. Last week, 10 of the 19 plaintiffs expressed their opposition to the proposed settlement announced in July.
According to proponents of the settlement, the revised settlement contains “meaningful structural reforms that could have been obtained by merchants through further litigation.” The reforms will shift the balance of power from the two dominant payment networks to card-accepting merchants, said K. Craig Wildfang, co-lead counsel for the merchants and a partner at Robins, Kaplan, Miller & Ciresi LLP, as reported by the CCH Federal Banking Law Reporter.
The revisions to the proposal did nothing to placate groups that oppose the settlement. “The proposal put on the table this summer was beyond tweaking, and the update presented today proves that fact. It remains manifestly unfair,” National Retail Federation Senior Vice President and General Counsel Mallory Duncan said in a statement. “The settlement still does virtually nothing to protect retailers or their customers from the abuses of the card industry, and it attempts to silence any objections for years to come. Retailers would rather take their chances in court than accept this one-sided swindle written by the card industry for the card industry.”
The National Retail Federation said the revised antitrust settlement filed in federal court scarcely begins to address retailers’ concerns about credit card swipe fees charged by Visa and MasterCard that cost consumers close to $30 billion a year.
“It should prove very significant to the court that the majority of the plaintiffs in this case have repudiated the settlement, and that includes half a dozen national trade associations representing thousands of merchants,” Duncan said. “The lawyers and handful of retailers who support the settlement do not represent the retail industry.”
“The proposal is unacceptable in every way and we look forward to making our case to the courts that this one-sided deal should be rejected,” said RILA President Sandy Kennedy. “The outrage within the retail community over this flawed proposal and the harm that it will cause cannot be understated.”
Lawyers representing 13 individual retailers and six trade associations ranging from convenience stores to restaurants announced the $7.25 billion proposed settlement of the case this past summer, but four of the individual companies and all six of the trade associations have since rejected the proposal.
The revised version of the settlement was filed in U.S. District Court in Brooklyn on Friday, and opponents have 30 days to voice their objections to the deal.
The named plaintiffs have said that they object to the proposed settlement because rather than reforming the anticompetitive and illegal practices engaged in by the credit card industry, it will allow that industry to continue to take advantage of merchants and their customers while blocking competition and choice. Over the last seven years, merchants and, ultimately, consumers have been charged $350 billion in swipe fees by the card companies.
The American Booksellers Association joined with the National Retail Federation, the Retail Industry Leaders Association, the National Association of College Stores, and other merchant trade groups in announcing their opposition to the swipe fee settlement in early October.