NEW YORK ShopRite, a national chain of supermarkets, filed a new antitrust suit yesterday against Visa and MasterCard, adding to the growing claims against the card companies as a final ruling on their landmark $7.2 billion settlement approaches.
ShopRite and its subsidiaries, Tobacco Plus and Rice Palace, claim the two card networks have adopted nearly identical rules, which are agreed to by their member credit unions and banks and imposed on merchants that accept cards issued by the institutions. “These rules, or Competitive Restraints, eliminate competition among their member issuing banks for merchant acceptance of credit cards and merchant acceptance of debit cards,” says the Crowley, La.-based company in its suit, filed in U.S. District Court for the Eastern District of New York, which is reviewing the huge antitrust settlement.
“As a consequence of having as members nearly all card issuers in the United States, and as a consequence of those card issuers having agreed to rules that preclude them from independently competing for merchant acceptance, Visa and MasterCard and their members have obtained and maintained market power in the market for merchant acceptance of credit cards and the market for merchant acceptance of debit cards in the United States," claims ShopRite.
“The exercise of this market power has led merchants to pay excessive interchange fees. In this manner, Visa and MasterCard have unlawfully restrained and continue to unlawfully restrain competition in these markets," ShopRite claims in its suit
The new suit comes as the landmark antitrust settlement appears to be unraveling, with others opposing the deal, including Target, Macy's, Bloomingdale's, Kohl's, Staples, JC Penney's and TJX Cos., bringing a new antitrust case in the same federal court. A final ruling on the landmarl antitrust deal settlement is expected in early September.
The ShopRite suit claims the principal rules that constitute the Competitive Restraints are the setting of "default" interchange fees, the Honor All Cards Rules, the All Outlets Rules, the No Discount Rules, and the No Surcharge Rules. “These rules, individually and in combination, preclude merchants from gaining the benefits of competition as to the terms, including a fee (if any), for the acceptance of cards of particular issuing banks and preclude card issuers from competing for merchant acceptance of their cards. As a consequence, the setting of "default" interchange fees effectively fixes the price of acceptance at a supracompetitive level. “
“Plaintiffs have paid and continue to pay significantly higher costs to accept Visa-branded and MasterCard-branded credit and debit cards than they would if the banks issuing such cards competed for merchant acceptance,” says ShopRite.
