The government's expert witness in its antitrust case against Visa and MasterCard was grilled on Thursday by MasterCard's attorney, who - like Visa's attorney on Wednesday - asserted that he presented a biased view in his 226-page expert's report.
The MasterCard lawyer, James Egan, asked why Michael L. Katz, an economics professor at the University of California at Berkeley, failed to include references in his report to documents illustrating robust competition between Visa and MasterCard.
Among the documents Mr. Egan put forth to prove his point were resolutions passed by MasterCard's board, which voted - sometimes unanimously - to adopt measures to help the association compete against Visa.
Mr. Katz said he agreed that these decisions reflected a desire by MasterCard to compete with Visa.
Mr. Katz's thesis is that MasterCard board members cannot make balanced decisions if their card portfolios consist heavily of Visa cards, and vice versa.
Mr. Egan wanted to disprove this theory.
Mr. Katz said the managements of Visa and MasterCard may favor competing vigorously, but are reined in by member banks that fear such competition would harm their business interests in the other association.
"Clearly there is competition between the associations, but it is reduced, distorted, and it harms consumers," Mr. Katz said.
To support his theory, Mr. Katz referred to a 1992 memo from Peter S. P. Dimsey, then the president of MasterCard's U.S. region.
Visa had complained to him that MasterCard made decisions that did not take Visa's position into account, and he wrote: "The interests of the MasterCard and Visa boards are fundamentally identical. Our board's interest in the success of both brands is substantial - 35% of our board's volume is on Visa cards."
Mr. Katz said, "This is not the type of document you would expect to find in an industry with arms-length competition."
