WASHINGTON – Visa and MasterCard agreed this afternoon to settle antitrust charges brought by the U.S. Justice Department claiming the two card giants illegally forced merchants to steer consumers towards using cards with higher fees.
At the same time, the Justice Department filed a similar suit against AmericanExpress, which has yet to agree to a settlement. AmEx, in a statement, said it has no intention of settling the case because it doesn't have market power to force merchants to accept its products or pricing.
The antitrust charges come as Congress continues to focus in on the practice of the card companies when it comes to assessing interchange fees. A provision to the recently passed Dodd-Frank Financial Reform Act, known as the Dubin amendment, will specifically bar the card companies from engaging in so-called steering.
The latest charges follow several other antitrust suits brought against the two card companies, which control some 80% of the market for credit and debit cards. In one of the biggest antitrust settlements ever the two companies paid over $3 billion to AmexEx and Discover Financial to settle claims their policies barring issuers from issuing competing cards were an illegal restraint of trade.
At issue in the new case are the various processing fees that the card companies charge merchants when customers use different cards. Cards that offer rewards such as airline miles cost merchants more, and merchants who agree to accept a company's cards must accept all of them.
The Justice Department investigation, which Visa and MasterCard disclosed in late 2008, involves card-company policies that prevent merchants from encouraging customers to use cards that have lower processing fees. The practice is currently permitted only under certain circumstances.
