The Justice Department's challenge to membership practices at Visa U.S.A. and MasterCard International is likely to degenerate into a knock-down-drag-out fight.

Antitrust lawyers who have followed the case closely said the two sides tried frantically-but ultimately fruitlessly-for the last several months to settle charges that the associations impede competition for credit cards.

The failure of the talks, these lawyers said, indicates that a pre-trial settlement is highly unlikely and that both the government and the card associations are girding for battle.

"There had been a lot of settlement talk in the last couple of months," one lawyer said. "It has just not worked. This is now set up to be a long piece of litigation."

The government's Oct. 7 suit challenges two major MasterCard and Visa policies. The first, known as duality, is the practice of allowing the same banks to run both organizations and issue both cards. Justice said this creates an inherent conflict of interest that makes both players less likely to invest in innovative products.

Justice also challenged policies at Visa and MasterCard that bar member banks from issuing American Express, Discover, and other competing credit cards. A trial is not expected for at least a year. To prevail, Justice must show that consumers were hurt by these practices. Several lawyers said this will not be easy.

"This is not a straightforward case," said Peter E. Greene, a partner at the New York law firm Skadden, Arps, Slate, Meagher & Flom. "There are a whole lot of reasons as to why the marketplace is structured the way it currently is."

The government will rifle through both association's files to see if executives ever backed away from introducing a product because it might have hurt the other card issuer, Mr. Greene said. Government economists also will construct models of what the credit card market might look like if the two companies were not controlled by the same banks, he said.

Edward F. Glynn Jr., a partner at the Venable law firm in Washington, said the government is essentially re-litigating a suit brought four years ago by Sears, Roebuck and Co., then owner of the Discover card. The U.S. Court of Appeals for the 10th Circuit ruled in favor of MasterCard and Visa.

"The government has got a tough case," Mr. Glynn said. "There is no bleeding body on the floor that the government can point to and say, 'Aha! Someone was driven out of business because of this rule.' You have American Express and Discover and regional credit cards."

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