The National Retail Federation said it will try to block a settlement of as much as $7.25 billion with Visa Inc. and MasterCard Inc. over the fees they charge shops when customers pay with credit cards.
The group, which represents more than 9,000 retailers, said the settlement of the price-fixing lawsuit does nothing to prevent Visa and MasterCard from raising the so-called swipe fees in the future. The NRF board authorized the group to "firmly and loudly" object to the settlement, Mallory Duncan, the group's general counsel, said today in a phone interview.
"We will try to find the most forceful way we can to let the court know that this deal is so unfair that it needs to be rejected at the outset," Duncan said.
The Washington-based NRF, which calls itself the world's largest retail trade group, is the latest of several trade associations and retailers to speak out against the settlement, which was announced on July 13.
The agreement, which must be approved by a federal court in Brooklyn, New York, would put to rest about seven years of litigation over allegations that San Francisco-based Visa and Purchase, New York-based MasterCard conspired to fix the fees. A hearing on the status of the settlement is scheduled for today before U.S. Magistrate Judge James Orenstein in Brooklyn.
K. Craig Wildfang, a lawyer for the plaintiffs who is advocating for the settlement, didn't immediately respond to an e-mail seeking comment on the NRF announcement.
Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which favors the settlement, said that the NRF and other groups have "political ulterior motives" for opposing the deal.
Sen. Richard Durbin's office has told retailers that they may lose out on legislative opportunities to rein in credit-card fees if they support the settlement. Durbin, a Democrat from Illinois, secured the inclusion of limits on swipe fees for debit cards in the 2010 Dodd-Frank Act, trimming revenue for the largest U.S. banks by about $8 billion.
Regarding the settlement, NRF was "absolutely aware of the negotiations, were intimately involved in the matter, and had ample opportunity over the years to weigh in through various channels, intervene, or become a party -- but clearly chose not to for tactical reasons," Wexler said in a statement.
Opposition may also be related to recently announced efforts to establish payment networks that may compete with Visa and MasterCard, she said.
In a conference call on July 25, Visa Chairman and Chief Executive Officer Joseph Saunders told investors that he expected a federal judge to grant preliminary approval to the settlement this year.
Visa rose 2.3 percent to $131.58 at 12:19 p.m. in New York Stock Exchange composite trading. MasterCard gained 1.8 percent to $445.26.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).