Joseph W. Saunders, chief executive officer of Fleet Credit Card Services, testified Wednesday that when he was a MasterCard International director he attended two high-level Visa meetings in which Visa presented its strategy to member banks.

Testifying in the credit card antitrust trial in New York, Mr. Saunders also said that he used to distribute written minutes from MasterCard board meetings to colleagues who sat on Visa's board.

Mr. Saunders appeared as a hostile witness for the Justice Department, which called him to show that there was extensive interaction and group planning between Visa and MasterCard board members. A central theme of the government's case against Visa and MasterCard has been that information-sharing and other such exchanges are evidence that the card associations do not actually compete.

Mr. Saunders was head of MasterCard's board from 1994 to 1997, when he ran Household International's credit card business. It was during his tenure, in 1996, that MasterCard adopted a rule - known as the "competitive programs policy" - barring member banks from working with nonbank brands.

In the early 1990s, when he worked at Household, Mr. Saunders was a member of both Visa U.S.A.'s marketing advisory committee and MasterCard's business committee, he said. It was said then that he used to share MasterCard meeting minutes with senior Household executives, some of whom sat on Visa's board.

Mr. Saunders said that he attended the two Visa executive meetings as a representative from Household, and that "there wasn't anything discussed that was secret." But after the meetings, Mr. Saunders said, he told H. Eugene Lockhart, who was then chief executive officer of MasterCard, that he had learned "things" at Visa that MasterCard should adopt.

M. Laurence Popofsky, Visa's attorney, said everything discussed at the Visa conferences was meant to be in the "public domain."

The Justice Department also tried to use Mr. Saunders testimony to show that the card associations discriminated against American Express Co. when they set up their rules about nonbank brands. The government pointed to a deal Household had made with JCB Co., the Japanese credit card issuer.

In 1994, while Mr. Saunders headed MasterCard's board, Household entered a 10-year exclusive cobranding agreement with JCB to issue credit cards to high-income business travelers in the United States who traveled frequently to Japan.

The policy against MasterCard banks' issuing nonbank brands had not been put in place. Mr. Saunders said the JCB agreement was separate from its business with Visa and MasterCard, because the JCB card was for upscale business travelers and was not a "general purpose" card.

The portfolio was small, and "Household told JCB [that] if their relationship hurt its Visa and MasterCard business, they would have to go their separate ways," Mr. Saunders said.

He testified that when discussions began over whether MasterCard would adopt the policy against nonbank brands, he said he believed JCB should be exempted from the nonbank brand rule, so that it could pursue its exclusive deal with Household. Household continued to issue JCB cards in 1996.

(In a telephone interview Wednesday a Household spokeswoman said that in January 1994 "Household issued a press release saying it signed an agreement with JCB to issue JCB cards in the U.S." The deal was "never anything big," the spokeswoman said, and "we no longer have it.")

A portion of Mr. Saunders testimony was held in Judge Barbara Jones's chambers because of confidentiality issues, and some legal sources speculated that part of that testimony was related to Household's agreement with JCB.

Scott Scheele, the Justice Department attorney who questioned Mr. Saunders, also asked him about his years at FleetBoston Financial Corp. and its predecessor Fleet Financial Group. Mr. Scheele sought to show that Fleet's banking relationships - and the cross-selling opportunities they presented - gave it an advantage over nonbank card issuers.

But Mr. Saunders countered that only 2% of Fleet's new card customers are acquired through cross-selling. Fleet is planning to switch its primary allegiance from MasterCard to Visa.

In testimony Tuesday afternoon, Donald Boudreau, vice chairman of Chase Manhattan Corp. and the current chairman of the MasterCard International board, said MasterCard's member agreements are a competitive device against Visa because they "call for the banks to channel around 80%" of their business to MasterCard.

Mr. Boudreau said his responsibilities to MasterCard's board did not play a role in Chase's decision to sign an agreement with MasterCard. When he and his colleagues at Chase were deciding which association to throw their weight toward, "I was fully prepared to resign my position at MasterCard if they chose Visa," he said. "I didn't want to mix my judiciary position with MasterCard" with Chase's business decisions.

Visa U.S.A. and Visa International did not cross-examine Mr. Boudreau in public, and much of his testimony was in the judge's chambers, because of confidentiality concerns.

The last witness Wednesday, Anil M. Khanna, a former Citigroup executive, testified that among the items on a Citibank "wish list" in 1997 and 1998 had been the elimination of Visa's 210.e rule - Visa's somewhat stronger equivalent to MasterCard's "competitive programs policy."

Mr. Khanna said that 210.e prevented Citibank from issuing American Express and Discover cards, and that the bank would have liked that option.

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