Feds Approve Final Antitrust Settlement With Visa, MasterCard

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NEW YORK – The Department of Justice filed papers yesterday to implement the settlement of its antitrust suit against Visa and MasterCard, which will prevent the two card networks from barring merchants from steering transactions to lower-cost cards.

In documents filed with the U.S. District Court for the Eastern District of New York, the Justice Department said public comments it received since the December 2010 settlement with the two card networks support the terms and entry of a final judgment in the landmark antitrust case “will provide an effective and appropriate remedy for the antitrust violations alleged in the [suit].”

In its suit, the Justice Department and 18 states alleged that Visa’s and MasterCard’s non-negotiable rules, policies, and practices – known as “merchant restraints” – insulated the card networks from competition.

The settlement prohibits Visa and MasterCard from enforcing rules that prohibit merchants from encouraging customers to pay with a competing credit card or with cash, checks or debit cards. The consent decree also restricts rules that prohibit merchants from promoting a particular type of payment through customer discounts, rebates, or free goods and services.

In its suit, the Justice Department alleges the anti-steering rules in place at Visa and MasterCard reduces consumers’ opportunities to use lower-cost cards, stifles innovation in payments and denies information to consumers about lower-cost payment options. Visa’s and MasterCard’s “Merchant Restraints also have heightened the already high barriers to entry and expansion in the network services market,” claims the antitrust suit.

The settlement comes as the Federal Reserve is expected to issue new rules any day capping interchange fees on debit cards and opening the card market to new competition.

A final settlement in the Visa and MasterCard case is expected to further a separate civil suit brought by merchants over the card networks’ anti-steering rules.

The antitrust suit also names American Express as a defendant but AmEx has refused to settle.


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