NEW YORK – Discover Financial Services is asking a federal court to order Visa and MasterCard to pay it $6 billion to settle an antitrust suit it brought two years ago.
The settlement would be funded by monies set aside by the credit union and bank owners of the two cards companies who face billions of dollars in legal claims related to their dominance of the market.
The Discover suit is based on a 2005 ruling by the federal courts that Visa and MasterCard violated federal antitrust laws by barring its credit union and bank issuers from also offering competitors, such as Discover and American Express. Visa has agreed to pay AmEx almost $3 billion to settle a similar suit.
Visa and MasterCard each have created multi-billion dollar defense funds to finance expected settlements in the Discover and AmEx suits that were capitalized from shares apportioned in each company’s initial public offering. Credit unions and banks have ongoing liabilities for additional funding if the defense funds are not adequate to pay future settlements, as well.
