WASHINGTON -- A majority of the plaintiffs representing the class of all merchants in the case of In Re Payment Card Interchange Fee & Merchant Discount Antitrust Litigation have announced their opposition to the proposed antitrust settlement agreement with Visa, MasterCard and some of the nation's largest banks.
The named class plaintiffs opposing the proposed settlement include Affiliated Foods Midwest, Coborn's Inc., D'Agostino Supermarkets, Jetro Holdings Inc. and Jetro Cash & Carry Enterprises, NACS, NATSO, National Community Pharmacists Association, National Cooperative Grocers Association, National Grocers Association and National Restaurant Association.
That means 10 of the 19 named class plaintiffs, a majority, oppose the settlement.
The plaintiffs object to the proposed settlement filed on October 12 because rather than reforming the anticompetitive and illegal practices engaged in by the credit-card industry, it will allow that industry to continue to take advantage of merchants and their customers while blocking competition and choice, they said.
In addition to the challenges for merchants, consumers struggling to pay for the basics need relief. Over the last seven years, merchants and ultimately consumers have been charged $350 billion in swipe fees by the card companies, said the plaintiffs.
The plaintiffs have been joined by a growing chorus of members of the merchant class in the litigation including the National Retail Federation, Retail Industry Leaders Association and National Association of College Stores, which have come out in opposition to the proposed settlement. The associations opposing the proposed settlement represent hundreds of thousands of stores with trillions of dollars in sales, which the plaintiffs said is a demonstration of the fundamental problems with the proposal.
"The people asking the court to approve the proposed settlement simply do not represent the interests of most merchants, we do. The proposal represents a minority view and must be rejected," said Hank Armour, president and CEO of NACS.
"On behalf of our members and the consumers they serve, we will continue to pursue our rights and fight for reform of the excessive anticompetitive credit card fees and oppressive rules that are being imposed on all merchants," said Peter J. Larkin, president and CEO of NGA.
"There is strong concern among our member companies that the proposed settlement will not achieve the litigation's most critical goal--to fundamentally change a broken marketplace in which swipe fees are set," said Dawn Sweeney, president and CEO for the National Restaurant Association. "We don't expect any settlement to address every flaw of the current system, but we cannot allow it to lock in the worst elements."
B. Douglas Hoey, CEO of National Community Pharmacists Association, said, "This proposed settlement not only enables continued centralized price-fixing by Visa and MasterCard, but it prevents all current and future merchants--even those that are not yet in existence--from challenging actions in the future. That is simply unfair."
The proposal will also hamper the potential for technology to reduce payment card costs. The proposed settlement would apply to mobile payments and would open the door for Visa and MasterCard to use anticompetitive means to dominate that market and block competition from new entrants in the market.
"We have a responsibility to represent all U.S. merchants and a settlement that cuts off the best chance for the market to help deal with swipe fees and mobile payments, cannot be allowed to go forward," said Robynn Shrader, CEO of National Cooperative Grocers Association.
"The proposed settlement is a bad deal that does not represent the best interest of merchants and their customers, further entrenches the anticompetitive practices of the Visa and MasterCard duopoly, and denies merchants their legal right to fight for real changes in court," said Lisa Mullings President and CEO of NATSO.
"Negotiators have greatly underestimated the outrage among retailers over this flawed proposed settlement," said Retail Industry Leaders Association president Sandy Kennedy. "Retailers overwhelmingly view this proposal not as a settlement, but as surrender."
Class counsel is expected to file the proposed settlement on October 12 and ask the U.S. District Court for the Eastern District of New York for preliminary approval. Opponents of the settlement will file a brief in opposition to preliminary approval either on Nov. 13, 2012, or 30 days after the proposal is filed.
Trish Wexler, spokesperson for the Electronic Payments Coalition--which represents credit unions, banks, and payment card networks--issued the following statement:
"On July 13, 2012, the U.S. District Court for the Eastern District of New York announced that a settlement was reached in the long-running legal dispute between retailers, payment networks and nine major card issuers over interchange fees and rules. Recently, some retail trade groups have begun publicly attacking the settlement that they were intimately involved in developing.
"It is clear that for some retail lobbying groups, nothing is ever enough. By publicly 'objecting' to a settlement that they themselves designed, they hope to create enough noise to secure even more handouts from Capitol Hill. This is politically motivated greed and must be seen for what it is. These same tired arguments were already raised over and over during the seven year negotiation, and would have been included in the final terms if they had merit. Moreover, retailers have yet to pass along savings to consumers from their last Washington handout--the Durbin amendment – so why should anyone believe these arguments today?
"We remain confident that this truly is the end of the 'swipe fee' debate, and that preliminary approval and eventually final approval will be granted by the court."