The second day of the Visa/MasterCard antitrust trial included testimony from a banker who issues American Express cards, a retail store executive who discussed interchange fees, and a former MasterCard executive who had managed smart card initiatives.

Lawrence B. Kesler, an executive vice president at Banco Popular of San Juan, Puerto Rico, testified Tuesday that if his bank had not signed an agreement with American Express Co. to issue cards on the nonbank's behalf, "our customers would have an Optima card from American Express."

Because of its location outside the 50 states, Banco Popular is exempt from Visa U.S.A. and MasterCard International rules that prohibit U.S. banks from issuing other brands. Banco Popular is one of several dozen foreign banks that have formed "network agreements" with American Express, under which they market Amex cards as well as Visa and MasterCard cards.

The second full day of the trial, in which the Justice Department is trying to prove that Visa and MasterCard have an anticompetitive stranglehold on the U.S. card market, was much less crowded and histrionic as the first. There was even a moment of levity, when a lawyer for Visa, Stephen Bomse, exhibited an American Express card - that happened to belong to his co-counsel, M. Laurence Popofsky, who has represented Visa for many years. Mr. Bomse was trying to make a point about the competitive options open to consumers.

Late in the day, Sandy Woods, the director of corporate accounts at Publix Super Markets Inc., a regional grocery store chain in Lakeland, Fla., began answering questions posed by government lawyers. The questions seemed aimed at making the point that merchants like Publix are forced to accept credit cards in order to stay in business. Ms. Woods said that 17% of Publix sales this year were conducted on credit cards or offline debit cards.

Ms. Woods said the store could get by without accepting American Express cards, but it could not afford to shun Visa and MasterCard.

John Elliott, a former MasterCard executive, took the stand for 10 minutes at the end of the day and will testify again today. The government is apparently interested in asking him about smart card initiatives.

Mr. Kesler's testimony filled the morning session. Although he is a member of MasterCard's board of directors in the Latin America region, he said that Banco Popular's bank card portfolio was 75% Visa cards, and 25% MasterCard cards. The government is trying to change the system that allows banks to govern associations where they hold a minority of their card accounts.

Mr. Bomse pushed Mr. Kesler to acknowledge that the American Express Optima cards Banco Popular offers come with certain restrictions that do not apply to a Visa card. For example, Banco Popular according to its agreement with Amex, may not call its product "the American Express card." Also, Banco Popular must pay a licensing fee to Amex to use its brand name. Visa does not levy such a fee, though it does levy membership fees.

Under the network agreement it signed with Banco Popular, American Express said it would wait six months before it began marketing its own Optima cards in competition with Banco Popular.

Separate from the network agreement, Banco Popular also markets Amex corporate cards and gets a $45 fee for each account it brings to Amex. After Banco Popular successfully solicits an American Express corporate account, however, Amex requires Banco Popular to wait 18 months before offering the same customer a MasterCard or Visa corporate card from the bank.

The Antitrust Witness List
Department of Justice's List
I. Visa's Past and Present Employees
II. Visa's Expert Witnesses
III. Visa's member bank witnesses
IV.Visa's American Express Witnesses
V. Visa's Discover Witnesses
VI. Visa's Other Third-Party Witnesses
VII. Click for DOJ's witness list for next week

 Source: Visa

Department of Justice Witnesses
Harvey Golub, American Express
Kenneth Chenault, American Express
James Cracchiolo, American Express
Steve McCurdy, American Express
Adam Rothschild, American Express
Auriemma Consulting, (if necessary, to provide basis for admission of exhibits)
Donald Boudreau, Chase Manhattan, chairman of MasterCard board
Harry DiSimone, Chase Manhattan
John Elliott, formerly of MasterCard
Alex W."Pete" Hart, former MasterCard CEO
Roger Hochschild, Discover
Russell Hogg, former MasterCard CEO
Walter Jewett, Booz, Allen
Bennett Katz, former general counsel, Visa U.S.A./International
Professor Michael L. Katz, University of California, Berkeley
Lawrence Kesler, Banco Popular
Robert Khanna, Citigroup
Leonard Laufer, Argus
H. Eugene Lockhart, former MasterCard CEO
Stephen Mott, formerly of MasterCard
David Nelms, COO, Discover
Phil Purcell, CEO, Morgan Stanley Dean Witter & Co.
John Reed, retiring co-CEO, Citigroup
Gayle Rigione, formerly of MasterCard
Mike Rodgers, Saks Inc.
Joseph Saunders, FleetBoston, former chairman of MasterCard board
Michael Timko, MasterCard (to authenticate and describe his notes of meetings)
James Tylenda, FleetBoston
Sandy Woods, Publix Super Markets Inc.
Christopher Zyda or Mark Britto,
Visa U.S.A. and Visa International Witnesses
Past and present Visa employees
Laurie Ailworth
Paul Allen
Michael Beindorff
John Bennett
Kenneth Bignall
Vince Boston
Sergio Botelho
David Brooks
Kenneth Crone
Richard Cullen
Victor Dahir
Irwin Derman
Linda Elliott
Dale Fehringer
Derek Fry
Patrick Gauthier
Heather Gray
Peter Gustafson
Richard Hagadorn
Steve Herz
Edward Jensen
Annika Hill Karlsson
Bennett Katz
Diana Knox
Tony Lewis
Andrzej Lubowski
Michael Marx
Edjv Massazza-Gal
Anthony McEwen
William Moore
Bradford Morgan
James Partridge
Carl Pascarella
William Powar
Charles Russell
Rebecca Saeger
Francine Schall
Steven Schapp
Ronald Schmidt
William Sheedy
Jan Soderstrom
Una Somerville
Robert Stock
Wesley Tallman
Hans van der Velde
Malcolm Williamson
Philip Yen
Visa U.S.A. expert witnesses:
Dr. Eric Clemons
Henry Dreifus
Professor Ronald Gilson
Dr. Stewart Myers
Dr. Richard Rapp
Dean Richard Schmalensee

Visa's member bank witnesses:
Jack Antonini, First Union
David Armentrout, Crestar/Suntrust
Patrick Blewett, Bank One
William Boardman, Bank One
Donald Boudreau, Chase Manhattan
Patrick Boylan, NatWest Group
Charles Cawley, MBNA
Randy Christofferson, Bank One/First USA
James Cosman, BankBoston
Peter Dimsey, MBNA/former MasterCard
Harry DiSimone, Chase Manhattan
Charles Doyle, Texas Independent Bancshares
Richard Fairbank, Capital One
Henry Fulton, Bank of America
Kenneth Guenther, IBAA
Richard Hartnack
Philip Heasley, U.S. Bancorp
Charles Hegarty, Wachovia
Anil Khanna, Citigroup
Shailesh Mehta, Providian
Siddarth Mehta, Household
Jeffrey Neubert, Bank One
David Nole, First Union
William Parent, BankBoston
G. Patrick Phillips, Bank of America
John Reed, retiring co-CEO, Citigroup
Kevin Rhein, Wells Fargo
Eugene Ryzewicz, Chase Manhattan
Joseph Saunders, FleetBoston, formerly of Household
Asmat (Sami) Siddiqui, Citigroup
Mark Tonneson, Royal Bank of Canada
James Tylenda, FleetBoston
Charles Walsh, Chase Manhattan
Beverly Wells, Wachovia
Robert Willumstad, Citigroup
Ronald Zebeck, Metris
Visa's American Express witnesses:
Anne Busquet
Kenneth Chenault
James Cracchiolo
Edward Gilligan
Harvey Golub
David House
Alfred Kelly
James Li
Stephen McCurdy
Adam Rothschild
Martin Wittwer
Visa's Discover witnesses:
Roger Hochschild
David Nelms
Philip Purcell
Visa's other third-party witnesses:
Walter Jewett, Booz, Allen
The Justice Department has submitted
the following witness list for this week and next
June 12-14
Lawrence Kessler, Banco Popular
John Elliott, formerly of MasterCard
Sandy Woods, Publix Super Markets Inc.
Steve McCurdy, American Express
June 19-23
Kenneth Chenault, American Express
Adam Rothchild, American Express
James Cracchiolo, American Express
Alex W. . Pete. Hart, ex MasterCard CEO
Russell Hogg, ex MasterCard CEO
Bennett Katz, former general counsel, Visa U.S.A./International
Joseph Saunders, FleetBoston Financial; former MasterCard board chairman
Christopher Zyda,

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