US judge approves US$5.7 billion settlement over credit card fees
By Andrew Longstreth, ReutersNEW YORK--A U.S. federal judge on Friday approved an estimated US$5.7 billion class action settlement between merchants and Visa Inc. and MasterCard Inc. over credit card fees despite objections from thousands of retailers who complained it was inadequate.
December 16, 2013, 12:16 am TWN
The settlement is believed to be the largest in a U.S. antitrust class action.
Merchants first sued Visa and MasterCard in 2005, accusing the two companies of fixing the fees charged to merchants each time their customers used their credit or debit cards. They were accused also of preventing merchants from steering customers to cheaper forms of payments.
U.S. District Judge John Gleeson of Brooklyn, New York, approved the settlement in a written order. He also dismissed some of the objections made by merchants opposed to the deal as hyperbole.
At a fairness hearing in September, he noted that one objector cast Visa and MasterCard as Nazis.
“I conclude that the proposed settlement secures both a significant damage award and meaningful injunctive relief for a class of merchants that would face a substantial likelihood of securing no relief at all if this case were to proceed,” Gleeson wrote.
The value of the settlement, reached last year, decreased to US$5.7 billion from roughly US$7.2 billion after thousands of merchants opted out of the deal, according to Craig Wildfang, an attorney for the plaintiffs.
Mallory Duncan, general counsel for the National Retail Federation, which opposed the settlement, said in a statement that his organization was reviewing Gleeson's ruling and expected to file an appeal.
“The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case, and a decision to approve it violates established law and common sense,” he said.
The settlement provides for cash payments to merchants nationwide and lets them begin charging customers an extra fee when they use Visa or MasterCard credit cards.
For Visa and MasterCard, Gleeson's decision could go a long way to alleviate a major legal headache that has plagued them for more than a decade.
In 2003, two years before the current case started, Visa and MasterCard settled a similar case with merchants over rules governing the use of their cards.