The retailing industry is mobilizing for an all-out legal assault on MasterCard International and Visa U.S.A.

Two major trade associations-the National Retail Federation and International Mass Retail Association-signed on last week to the antitrust suit that Wal-Mart Stores Inc. and The Limited Inc. filed against Visa last October.

They were further reinforced by two other big names-Sears, Roebuck and Co. and Burlington Coat Factory-and now MasterCard is included as a defendant.

All the filings are expected to be consolidated today in U.S. District Court for the Eastern District of New York.

It is taking shape as the most potent legal challenge ever mounted against the rulemaking powers of MasterCard and Visa-unless a pending U.S. Department of Justice investigation results in a federal lawsuit that could be even farther-reaching.

The retailers have rallied around allegations that MasterCard and Visa coerce merchants into accepting debit cards at roughly the same prices charged for credit cards. Claiming that debit transactions are less risky and should be cheaper, the merchants view the status quo as a "tying arrangement" that violates antitrust laws.

The Justice Department probe, by contrast, has focused on the bank card associations' membership policies. The issue came to the fore when American Express Co. and Dean Witter, Discover & Co. complained that MasterCard and Visa prohibited their card-issuing members from entering into marketing alliances with those competitors.

Sources close to the government investigation, which was the subject of an article in Friday's Wall Street Journal, said Justice's antitrust division is nearing the end of its probe into the card associations' ownership and competition restrictions.

Bankers have reported that Justice asked for information regarding the personal involvement of their senior executives in MasterCard and Visa activities.

But while the federal case is still up in the air, the retailer threat is immediate.

The Washington-based National Retail Federation represents more than 1.4 million general merchandisers, including major department stores and independents. The Arlington, Va.-based mass retail group has about 180 members, including Wal-Mart, K Mart, and Home Depot.

Debit pricing has long been a source of tension between retailers and bankers. The stakes have gotten higher as MasterCard and Visa have made major gains in promoting their debit products. Visa has mounted debit advertising campaigns with former Sen. Bob Dole and Deion Sanders among its celebrity pitchmen.

The retailers claimed they paid $250 million in Visa fees in 1995 for debit cards.

The Wal-Mart-Limited lawsuit raised merchants' consciousness about Visa and MasterCard's policies, said Mallory B. Duncan, vice president and general counsel for the retail federation. "The fact that there was a major case out there created a lot more focused discussion about the issue," said Mr. Duncan.

The sheer heft of the participating retailers may put pressure on Visa and MasterCard to settle out of court. Lawyers said the plaintiffs will likely be granted class-action status. This raises the possibility of potentially severe damage claims, said Anita Boomstein, an attorney with the New York firm of Hughes, Hubbard & Reed.

Nevertheless, MasterCard and Visa steadfastly maintained they will defend their policies.

MasterCard said its brand would be "harmed if merchants were free to accept certain MasterCard cards and refuse to accept others."

Visa U.S.A. said despite its "strong and productive business relationship" with the National Retail Federation, it was "dismayed" about the action against the "honor all cards rule."

"It is the cornerstone of what Visa stands for and is essential to the enormous benefits that Visa and its members deliver to merchants and consumers," the card organization said. u

The retailing industry is mobilizing for an all-out legal assault on MasterCard International and Visa U.S.A.

Two major trade associations-the National Retail Federation and International Mass Retail Association-signed on last week to the antitrust suit that Wal-Mart Stores Inc. and The Limited Inc. filed against Visa last October.

They were further reinforced by two other big names-Sears, Roebuck and Co. and Burlington Coat Factory-and now MasterCard is included as a defendant.

All the filings are expected to be consolidated today in U.S. District Court for the Eastern District of New York.

It is taking shape as the most potent legal challenge ever mounted against the rulemaking powers of MasterCard and Visa-unless a pending U.S. Department of Justice investigation results in a federal lawsuit that could be even farther-reaching.

The retailers have rallied around allegations that MasterCard and Visa coerce merchants into accepting debit cards at roughly the same prices charged for credit cards. Claiming that debit transactions are less risky and should be cheaper, the mechants view the status quo as a "tying arrangement" that violates antitrust laws.

An antitrust suit that two major retailers, Wal-Mart Stores Inc. and The Limited Inc., filed against the bank card organizations last October was reinforced last week as two major trade associations signed on for the battle.

The associations-the National Retail Federation and International Mass Retail Association-added their considerable weight to the accusations that MasterCard

, accusing the bank card associations of antitrust practices.

A class action suit filed in October by Wal-Mart Stores Inc. and The Limited Inc. against Visa gained added muscle this week when the National Retail Federation and the International Mass Retail Association said they are joining the retailers' lawsuit.

The Justice Department probe, by contrast, has focused on the bank card associations' membership policies. The issue came to the fore when American Express Co. and Dean Witter, Discover & Co. complained that MasterCard and Visa prohibited their card-issuing members from entering into marketing alliances with those competitors.

Sources close to the government investigation, which was the subject of an article in Friday's Wall Street Journal, said Justice's antitrust division is nearing the end of its probe into the card associations' ownership and competition restrictions. Justice is focusing on the associations' membership policies as well as the ownership of Visa and MasterCard.

Bankers have reported that Justice asked for information regarding the personal involvement of their senior executives in MasterCard and Visa activities.

But while the federal case is still up in the air, the retailer threat is immediate.

The Washington-based National Retail Federation represents more than 1.4 million general merchandisers, including major department stores and independents. The Arlington, Va.-based mass retail group has about 180 members, including Wal-Mart, K Mart, and Home Depot.

The assault by the retailers comes amidst an escalating investigation by the Justice Department into the bankcard associations' membership policies, which prohibit member banks from issuing the card products of American Express Co. and Dean Witter, Discover & Co..

At issue in the merchants' lawsuit are Visa's and MasterCard's policies of requiring merchants who accept their credit cards to also accept their debit products. According to the lawsuit, this so-called "tying arrangement" forces merchants to accept the Visa Check card and the Master Money card. The lawsuit claims that the cost of processing a debit transaction is less than that of a credit transaction because there is virtually no risk involved, yet merchants are charged nearly the same fee for both transactions.

Debit pricing has long been a source of tension between retailers and bankers. The stakes have gotten higher as MasterCard and Visa have made major gains in promoting their debit products. Visa has mounted debit advertising campaigns with former Sen. Bob Dole and Deion Sanders among its celebrity pitchmen.

The retailers claimed they paid $250 million in Visa fees in 1995 for debit cards.

The Wal-Mart-Limited lawsuit raised merchants' consciousness about Visa and MasterCard's policies, said Mallory B. Duncan, vice president and general counsel for the retail federation. "The fact that there was a major case out there created a lot more focused discussion about the issue," said Mr. cq Duncan.

The sheer heft of the participating retailers say the retail associations' involvement in the lawsuit puts greater pressure on may put pressure on Visa and MasterCard to settle out of court. Lawyers said the plaintiffs will likely be granted class-action status. This raises the possibility of potentially severe damage claims, said Anita Boomstein, an attorney with the New York firm of Hughes, Hubbard & Reed.

The trade associations represent merchants who sell about $2.5 trillion in merchandise as opposed to the sales revenues of the major retailers individually mentioned in the lawsuit.

Nevertheless, MasterCard and Visa steadfastly maintained they will defend their policies.

MasterCard said its brand would be "harmed if merchants were free to accept certain MasterCard cards and refuse to accept others."

Visa U.S.A. said despite its "strong and productive business relationship" with the National Retail Federation, it was "dismayed" about its action against the "honor all cards rule."

"It is the cornerstone of what Visa stands for and is essential to the enormous benefits that Visa and its members deliver to merchants and consumers," the card organization said.

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