If you thought that the “Risk Factors” that MasterCard® described during its IPO filing was frightening, just wait for Vias’s® list of reasons to get worried too. As reported today by AP, “The offering will also help insulate member banks from billions of dollars in potential legal damages from antitrust claims brought by merchants”.
Just as with MasterCard, Visa too can try to pawn off its legal liabilities onto others, but its prior alleged antitrust violations and legal obligations do not evaporate by selling shares to the public.
Reuters is reporting that “the filing shows that Visa USA members will assume responsibility for a variety of litigation, including antitrust lawsuits in which merchants are accusing Visa and MasterCard of price-fixing…. Visa intends the IPO to fund expansion and help pay potentially heavy legal bills.”
These prior WayTooHigh.com postings help explain why, in our opinion, the transferring of ownership does nothing to dissolve their prior damages.
Will “Risk Factors” Doom MasterCard’s® IPO? (WayTooHigh.com)
“MasterCard’s® Legal and Regulatory Risks Threaten … Its Entire Business Model” (BW)
Banks Set to Bolt From MasterCard Inc.® on May 22 (WayTooHigh.com)
[source: WayTooHigh.com, with link to AP]
According to Sunday’s New York Times, reporters Matt Richtel and Bob Tedeschim (June 17) have a high-profile front page story explaining that the decades’ “hypergrowth” of ecommerce purchasing has realized a “dramatic” slowdown. The article, however, does not profile highly innovative companies, such as ScanMyPhotos.com, which created an entirely new business model for super-speedy high-speed photo scanning. But, the story does raise questions that if ecommerce business is slowing, what does that mean for the two leading credit card associations? With nearly all ecommerce and online business beholdened to electronic payments, if there is a significant slowdown from other sectors, what impact will that have on companies like Visa® and MasterCard®. If there is a slowdown, will they simply wield their (and its member banks) unbridled market power to raise interchange fees again to counter any adverse effects to its revenue stream?
ScanMyPhotos.com is owned by 30 Minute Photos Etc., the lead plaintiff in the merchant interchange litigation against Visa, MasterCard and its member banks.
[Commentary: WayTooHigh.com, via NYT’s article]