Credit card industry experts expressed surprise and relief at the appeals court ruling that Dean Witter, Discover & Co. may not enter the Visa network.

The 10th U.S. Circuit Court of Appeals in Denver on Friday overturned a November 1992 jury decision that had allowed Dean Witter to issue Visa cards through a since-failed savings, and loan institution in Utah called Mountain West Financial.

The appeals panel overturned a jury verdict that a Visa bylaw denying membership to a direct competitor violates antitrust laws.

"I was a little surprised," said Donald I. Baker, a former assistant attorney general for antitrust, who now runs his own law firm in Washington.

"I thought Visa had a solid chance of winning, but I also thought it was a close game. As with any close game you are surprised when the side you thought should win actually wins."

Visa U.S.A announced triumphantly that "the ruling is a clear victory for consumers, who will continue to benefit from competition between the four major card brands and new innovations for the future."

Dean Witter released its own terse statement, saying that the "10th Circuit Court of Appeals decision is very disturbing. We believe this ruling is contrary to the antitrust laws and we intend to appeal to the Supreme Court."

Paul A. Allen, executive vice president, general counsel, and secretary of Visa U.S.A. minces no words to explain how the association views Dean Witter's request for membership:

"Dean Witter is saying to Visa, |We have developed and marketed the Discover card, but it would be better for Dean Witter if we also had your card.' That is a remarkably audacious request for Dean Witter to make."

The appeals panel's ruling, written by Judge John P. Moore, supports Visa's contention that Dean Witter's entry into the association would inhibit competition rather than promote it.

If the decision had been upheld, Dean Witter would have sought $1 billion in damages.

The decision states that the bylaw was necessary to "prevent free-riding in a market in which there was no evidence price was raided or output decreased or Sears [Dean Witter] needed Visa to develop the new card . . ."

"I think it was the right decision from the standpoint of competition," Mr. Baker added. "It is a decision that brings light to a swampy area of the law."

Anita Boomstein, an industry observer and lawyer, disagreed with the logic of the ruling.

Ms. Boomstein, a partner in the New York firm Hughes Hubbard & Reed, said, "Obviously, the court determined that it is important to have two separate brands to maintain competition, but I think that if they had allowed Dean Witter to become a Visa member, there would have been intense intrabrand competition."

"Consumers would be able to decide which is the better product rather than the courts," said Ms. Boomstein.

The tortured history of Dean Witter's desire to issue Visa and MasterCard cards spans essentially 11 years.

In 1983, Dean Witter's former parent, Sears, Roebuck & Co. requested entry into the Visa payment system to issue a general-purpose credit card. It was denied access by the San Francisco-based association, but proceeded to fulfill its goal by launching the Discover Card in 1986.

In 1990 Dean Witter's subsidiary, Mountain West, applied for membership in Visa, which maintains that the application was really an attempt to get Dean Witter into the bank card system through the back door.

Visa contends that the thrift misrepresented itself in the application by not disclosing its association with Dean Witter. As a result, the association filed a lawsuit against Dean Witter in 1991, and intends to pursue it, said Mr. Allen.

"As a reader of statistics," said Mr. Baker, "the chances of the Supreme Court taking the case are less than 50%."

Mr. Baker added that Justice Stephen Breyer has spent a lot of time thinking about networks, so his experience in this area could wield some influence."

MasterCard, for its part, issued a statement on Monday offering congratulations to Visa.

MasterCard had been criticized by some industry observers for striking a deal with Dean Witter in November 1993 that allowed it to issue a credit card called Prime Option through NationsBank, a MasterCard member.

The deal stipulated that Dean Witter could become a MasterCard member only if Visa lost its legal battle against Dean Witter.

The New York-based association said: "Under the terms of the settlement, the NationsBank Prime Option MasterCard program remains a cobranded program that conforms to MasterCard membership principles."

In an interview, H. Eugene Lockhart, MasterCard's chief executive, said, "There needs to be a clear understanding of the effect the ruling has on MasterCard: Absolutely nothing. We struck a deal with Dean Witter and that deal has proven to be a good one. The deal now ceases. All of the other legal discussions are now concluded."

Visa International president Edmund P. Jensen said Visa's executive management committee was meeting in New York when news of the decision arrived. "We were very pleased, naturally, especially in the sense that our confidence that we were right was not overplayed."

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