WASHINGTON — The National Retail Federation is set to go to court in order to block the proposed $7.25 billion settlement of a federal antitrust lawsuit over Visa and MasterCard credit card swipe fees.
NRF said a resolution, which has been approved by its board of directors, authorizes NRF to take steps, including "intervention in pending actions" in order to reach a solution "equitable to the broad merchant community." NRF is exploring what form the legal action might take. NRF noted it is not a party to the lawsuit, and U.S. District Court judge John Gleeson has not yet fully outlined how outside groups will be allowed to intervene, or if the case qualifies as a class action.
NRF is concerned by a number of provisions of the proposed settlement:
The $7.25 billion amounts to pennies on the dollar. If the case went to trial, a verdict in favor of retailers could result in a judgment totaling hundreds of billions of dollars given the eight-year time period of the case and rules allowing for antitrust damages to be tripled;
Nothing is done to block future increases in swipe fees. Without competitive restrictions, the card industry would quickly recoup the cost of the settlement from the very retailers who have been harmed, and increases that have averaged 16 percent a year over the past decade could continue indefinitely;
Nothing is done to reform the anticompetitive, cartel-like system by which Visa and MasterCard each set fee schedules that all banks issuing their respective cards agree to follow. NRF has testified before Congress that the system is a violation of federal antitrust law;
Nothing is done to require the card industry to disclose the fees on the cards or otherwise create the transparency needed to bring about competition to lower fees;
A highly publicized provision allowing merchants to surcharge customers who pay by credit card is pointless because merchants are seeking to reduce prices for customers, not increase them. It also includes myriad restrictions that would make it difficult to surcharge even if someone wanted to;
Visa and MasterCard have promised to recognize merchant bargaining groups, but no requirement is made for the card companies to negotiate in good faith; and