LOUISVILLE, Ky. -- Thorntons Inc. has issued a statement saying that it opposes the proposed settlement of longstanding antitrust litigation between retailers and the credit-card industry over interchange or "swipe" fees. And Jay Ricker of Ricker Oil is backing the growing chorus of retailers who are upset with the proposed settlement.
On July 13, Visa Inc., MasterCard Inc. and the banks that serve them offered a settlement of $7.25 billion in response to a lawsuit brought by retailers alleging price fixing in credit-card swipe fees. The plaintiffs claimed the price fixing by banks prevents competition.
The National Association of Convenience Stores (NACS), the Society of Independent Gasoline Retailers of America (SIGMA), the National Grocers Association (NGA), the National Cooperative Grocers Association (NCGA), among other retail groups, as well as Wal-Mart Stores and Target Corp., oppose the settlement (see Related Content below for previous CSP Daily News coverage).
The proposed settlement does not make meaningful changes to the broken credit-card swipe-fee market, said Thorntons, and it broadly restricts merchants' rights to challenge the card industry's anticompetitive practices in the future.
The proposal offers no long-term relief for retailers or consumers from increasing swipe fees or from unfair credit-card network rules, the company said, and it will not keep the card networks from continuing to raise swipe fees, which already cost retailers and consumers around $50 billion per year.
Merchants have been fighting for years to bring real competition and transparency to the credit-card market, Thorntons added.
The proposed settlement does not achieve those objectives, it said.
Rather than accept this flawed settlement, Thorntons is urging everyone in the merchant community nationwide to work toward a real solution to the problem caused by the card companies' anticompetitive conduct.
Ricker, who owns Ricker Oil Co., Anderson, Ind., said the settlement is a boon to the credit-card companies and banks, but not for retailers and consumers.
"Ricker Oil Co.'s primary goal is to provide great service at a fair price to our customers. Continuing to battle the unfair rules and fees from credit-card companies is just one of many things we're doing to keep that goal intact," said Ricker in a statement obtained by The Herald Bulletin.
Ricker asked rhetorically how retailers could turn down $7 billion. He said the process of setting swipe fees needs to be transparent. He added that swipe fees are higher in the United States than anywhere in the world, and questioned why that is since the United States has better technology to process transactions. Australia, he said, pays a quarter of the fees the United States does.
"Visa is everywhere," said Ricker. "How come rates are so much lower in other countries?"
As part of the settlement, the credit-card companies would allow retailers to pass the swipe fees onto consumers. Currently, Ricker said, retailers can't do that, not by any law but because credit-card companies prohibit the practice.
Ricker said the "Visa police" keep track of retailers passing costs to consumers and could deny their card being used at outlets that don't comply.
Now that the credit card-companies have made their offer, the plaintiffs will accept or reject the proposal. The decision will precede a trial that is scheduled to begin in U.S. District Court in Brooklyn, N.Y., with U.S. District Court Judge John Gleeson in late September. Gleeson will also determine whether the settlement should stand, and Ricker hopes that with the number of retailers against the settlement, Gleeson will take their concerns into consideration.
"What they decide [in court] will affect everyone in retailing," Grant Monahan, president of the Indiana Retail Council, told the Herald Bulletin. He said that, as part of the settlement, credit-card companies will lower swipe fees for eight months. "But this doesn't provide long-term relief," he said. "It's a short-term fix."
Another key sticking point in the settlement is the prohibition of future lawsuits against the credit-card companies and banks. That has retailers worried that after eight months, swipe fees could begin rising and price fixing could once again occur, and they would be left without legal recourse.
"That's not something most retailers would do," Michael Hicks, economics professor at Ball State University told the paper about signing away the right to future litigation.
Ricker pointed out that the counsel for the plaintiffs, who were involved with the credit-card companies in drafting the settlement, wanted the retailers on board. But $7 billion is only three months' profit for the banks, Ricker noted. "This doesn't get them to change rates."
Thorntons is a leading U.S. independent gasoline and convenience chain retailer, currently operating throughout the Midwest. With more than $2.3 billion in revenue, Thorntons is the largest privately held corporation in the Commonwealth of Kentucky. It operates 165 gasoline and convenience stores, car washes and travel plazas in five states: Kentucky, Illinois, Indiana, Ohio, and Tennessee. It distributes its petroleum products through its wholly owned Thornton Transportation Co. and operates a river bulk storage terminal in Louisville.
Founded in 1979, Ricker Oil is a family-owned company. It owns and operates 50 convenience stores in Indiana, as well as a petroleum dealership and other enterprises.