NEW YORK Visa and MasterCard filed suit Friday against several of the nation’s biggest retailers seeking a declaration that the fees they charge merchants for credit card transactions do not violate antitrust law, potentially adding significant costs to credit unions and banks which would pay for the landmark $7.2 billion settlement.
The suit came a day after the National Retail Federation and 18 of the biggest U.S. companies, including Walmart, Target, Starbucks, Kohl’s, Macy’s and J.C. Penney, filed their own suit to opt out of the settlement and preserve their right to file additional antitrust claims in the setting of swipe fees by the two card networks. Other dissenters include: Costco The Gap, J. Crew, 7-Eleven, and Crate & Barrel.
Escalation of the eight-year-old antitrust battle comes amid a pending deadline of midnight tonight for dissenters from the antitrust deal to file their objections with the U.S. District Court for the Eastern District of New York which gave preliminary approval to the settlement last winter.
The ramifications are enormous for credit unions and banks, which are slated to pay the costs of the settlement indirectly. That’s because Visa and MasterCard are widely held stock by credit unions—the only stock they are authorized to own. Both companies have financed their litigation settlement funds by requiring credit unions and banks to sell back their stock at prearranged prices.
In Friday’s suit Visa and MasterCard are asking the court to declare that credit card interchange, or swipe, fees are lawful and pro-competitive.
The suit is the latest in a decade-long battle between the merchants and Visa and MasterCard—which control more than 80% of the cards market—over swipe fees and other practices. The two networks paid $4.5 billion to settle a separate 2003 antitrust case and fought a bitter battle over the so-called Durbin amendment to the 2010 Dodd-Frank Act setting caps on interchange fees charged on debit transactions.
