A lawyer for Visa spent an entire court day Wednesday pummeling the sole expert witness put up by the Justice Department in the credit card antitrust case, an economics professor whom the card associations are ridiculing as an ivory tower-type who never worked in banking.

The professor, Michael L. Katz of the University of California at Berkeley, took the stand Tuesday and will likely stay there through Thursday - longer than any witness thus far in the case, which began June 12. Visa and MasterCard are spending hours trying to discredit the findings of a 226-page report he prepared in support of the government's position.

Mr. Katz's report has not yet been admitted as evidence in the trial, because of confidentiality concerns by a bank mentioned in it. But the essence of his recommendations, as described in court, are that Visa and MasterCard should strike down their membership rules that prevent banks from working with American Express Co. and Discover.

Mr. Katz argues that what is known as dual governance - board members of one association may also have a strong interest in the other association - should be limited. He also says consumers are harmed by the lack of competition between Visa and MasterCard, and he identifies four areas where competition has been impaired: chip cards, Secure Electronic Transactions technology, neural networks, and advertising.

The Visa lawyer who grilled Mr. Katz all day, Stephen Bomse, made much of the point that Mr. Katz's report never quantifies the harm that lack of competition between Visa and MasterCard may have caused. Nor, Mr. Bomse said, does Mr. Katz elaborate on how many innovative products were stifled as a result of curtailed competition.

"You can't specify quantity, how much improvement [there would be] if the policies were ended, and you can't cite innovations that would occur as a result of these eliminations?" Mr. Bomse asked Mr. Katz.

Mr. Katz said that was true. "I'm not prepared to testify what the competition should be, I'm here to tell you that there has been harm," Mr. Katz said.

A government spokeswoman said in an interview that there was no need for Mr. Katz or the Justice Department to quantify the deleterious affects of Visa's and MasterCard's actions. "Once the government has shown that the defendants' anti-competitive actions have forestalled important innovation, it is not necessary to quantify that harm precisely in order to know that it has caused significant harm to consumers," she said.

Mr. Bomse also asked Mr. Katz's opinion of the current board structure of Visa U.S.A. and whether or not the board qualifies as a "dedicated" under Mr. Katz's definition. Six of the ten banks represented on Visa's board have signed contracts with Visa promising that by 2003, 90% of their credit card portfolios would be composed of Visa cards. A seventh bank, Wachovia Corp., pledged 88%.

Mr. Katz said that this development "would take Visa a long way, perhaps, toward dedication," the goal the government is seeking. But he also said: "It's hard to say whether this situation exists today as a result of this litigation."

In another line of questioning, Mr. Bomse argued that Mr. Katz's job and work were so far removed from the credit card industry that doubt should be cast on his ability to make such judgments or be considered an "expert." Mr. Katz has spent the bulk of his career in academia, and never worked within the payment systems industry. From 1994 to 1996, he was chief economist at the Federal Communications Commission.

Mr. Bomse tried to show that Mr. Katz was not an impartial observer of the industry, and asserted that Mr. Katz's research in the case was biased and incomplete. Apparently Mr. Katz's former business partner in a consulting firm, Carl Shapiro, has worked as a consultant for American Express Co.

At the consulting firm, Charles River Associates Inc. of Boston, Mr. Katz was also a partner of Steven C. Salop, who was a consultant to Morgan Stanley Dean Witter & Co. in the MountainWest litigation in the mid-1990s involving Visa U.S.A., Mr. Bomse said.

Mr. Bomse said that as Mr. Katz prepared his report for the government, he had more conversations with American Express than with the bank card associations. Mr. Katz said that was true, the reason being that there was ample material in the public record from Visa and MasterCard executives, but little from Amex. He said he spoke with Amex executives to clarify issues he could not find in the documents the government had given him.

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