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Visa and Mastercard have finally settled an antitrust class action lawsuit brought by merchants that has been in the judicial court system since 2005. The case consolidated about 40 class action lawsuits last year, bringing the caseload paperwork to a whopping 65 million pages. The proposed $6.2 billion settlement deal would be the largest class action settlement in an antitrust case. Needless to say, this is big news on many fronts.
In this consolidated class action, 19 merchants and trade groups alleged Visa and MasterCard conspired to fix fees at exorbitantly high rates charged to merchant customers for processing credit card payments. According to plaintiffs, this resulted in billions of dollars paid in excess swipe fees.
The latest $6.2 billion settlement covers the monetary claims in the lawsuit. What still needs to be settled is the equitable remedies: what ongoing rules can Visa and Mastercard impose to accept their cards, and what happens to the thousands of merchants who chose not to participate in the settlement. Of note, major retailers, such as Walmart and Kroger opted out of this lawsuit, since they will be able to negotiate even better deals.
The settlement offer still needs to receive judicial approval. The last settlement the two offered nearly six years ago was rejected by the court because of overly broad language that required merchants to agree to waive any claim they have against the two for any policy in place as of November 2012, in perpetuity, as long as Visa and Mastercard leave in place the surcharge rules modified by the settlement agreement.
The judge felt that the merchant companies did not have adequate representation if they believed this broad "in perpetuity" agreement was fair to the merchants, since it would limit their ability to bring future lawsuits. It would have also done little to end non-compete practices. Though this deal has yet to be blessed, the judge has already stated that he thinks it is fair, and has been very impressed with the merchant's new counsel.
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