On Air Now

Upcoming Shows

Program Schedule »

Listen

Listen Live Now » 1330 AM Sheboygan, WI

Weather

Current Conditions(Sheboygan,WI 53081)

More Weather »
72° Feels Like: 72°
Wind: SW 9 mph Past 24 hrs - Precip: 0.04”
Current Radar for Zip

Tonight

Scattered Thunderstorms 69°

Tomorrow

Thunderstorms 76°

Sun Night

Isolated Thunderstorms 63°

Alerts

Retail credit card fee settlement gets preliminary OK

By Jessica Dye

(Reuters) - A U.S. judge on Friday granted preliminary approval to a proposed $7.2 billion settlement between merchants and Visa Inc and Mastercard Inc over credit card fees, despite objections from hundreds of retailers, including Wal-Mart Stores Inc.

If the deal receives final approval from U.S. District Court Judge John Gleeson of Brooklyn, New York, it would be the largest federal antitrust settlement in U.S. history, offering nearly 8 million merchants $7.2 billion in cash and temporary reductions in the interchange, or swipe fees, they pay to process credit and debit transactions.

Visa and Mastercard agreed to amend their no-surcharge policies within 60 days of preliminary approval of the deal, allowing merchants to charge customers extra for paying by credit or debit, although that will be restricted by state law.

The stores that take Visa and Mastercard will be provisionally certified for settlement purposes and notified of their legal rights. Full terms of the deal will not take effect unless Gleeson gives final approval, which Visa and Mastercard say they believe will occur. The judge will hold a hearing to give objectors a chance to weigh in before then, although no date has yet been set.

The $1.2 billion in temporary swipe-fee relief will take effect shortly after class members have been given an opportunity to opt out of receiving the monetary damages, even if the deal never receives final approval, according to settlement papers.

During a packed hearing on Friday, lawyers for dozens of objectors -- including Target Corp and Home Depot Inc -- told the judge that the settlement offered meaningless relief for merchants saddled with an estimated $30 billion in annual swipe fees. They also argued that releases shielding Visa and Mastercard from new litigation over the same claims would violate their legal rights and give the two companies protection from for any future anti-competitive behavior. No opt-out mechanism is provided for the no-surcharge rules or litigation releases.

Lawyers for several dozen stores that support the pact -- which include major grocery chains Kroger Coand Safeway Inc -- told Gleeson that these concerns were based on "misinformation."

"It's a lot of smoke and there's very little fire," said Richard Arnold, who represents some of the objectors.

Gleeson called the initial objections "overstated" but noted that the legal standard for final approval would be much higher. Gleeson has yet to schedule a hearing on final approval.

"I don't mean to suggest there aren't a number of issues that are going to require significant scrutiny," he said. Gleeson said he was considering whether to appoint an independent expert to help him understand the economic impact of the changes to Visa and Mastercard's no-surcharge rules.

Visa general counsel Josh Floum said the company looked forward to bringing "closure" to the case, after seven years of litigation, including two years of settlement talks.

"While we recognize some merchants may have different opinions, the settlement represents a solution reached after years of litigation and months of negotiation," said Mastercard general counsel Noah Hanft.

Objecting merchants said they were prepared to keep fighting.

"This is the beginning of a long process, and we're not remotely deterred by what happened today," said Jeff Shinder, a lawyer for 10 of the 19 original plaintiffs who have rejected the settlement.

Mallory Duncan, general counsel for the National Retail Federation, one of the largest U.S. trade associations for retailers, said it was considering its legal options.

"This proposal benefits no one but lawyers and credit card companies, and should not be forced on the retail industry or retailers' customers," he said.

(Reporting by Jessica Dye in New York; Writing by Brad Dorfman and Jessica Dye; Editing by Leslie Adler, David Gregorio and Dan Grebler)

Comments