(Reuters) – Visa Inc, Mastercard Inc and banks issuing their credit cards have agreed to a settlement valued at $7.25 billion and will allow stores to encourage customers to use cheaper forms of payment, according to settlement papers filed on Friday in a lawsuit in Brooklyn federal court.
Merchants Reach Landmark $7.25 Billion Settlement with Visa, MasterCard and Major U.S. Banks for Alleged Anticompetitive Practices and Price Fixing In Setting Interchange FeesJuly 13, 2012
MINNEAPOLIS, July 13, 2012 /PRNewswire via COMTEX/ — Robins, Kaplan, Miller & Ciresi L.L.P. has reached an historic $7.25 billion settlement on behalf of a class of approximately seven million merchants in the United States who accept Visa and MasterCard credit cards and debit cards. The settlement is with payment card networks Visa and MasterCard and with card-issuing banks, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and other major banks.
Robins, Kaplan, Miller & Ciresi L.L.P. filed the case in 2005, and was appointed by the United States District Court for the Eastern District of New York, along with two other law firms, to represent the class in the case. The settlement that has now resolved the case is believed to be the largest ever settlement of a private antitrust case under the Sherman Act (15 U.S.C. section 1 et seq.).
The settlement terms include a cash payment and significant reforms of Visa and MasterCard rules and business practices. The cash component of approximately $7.25 billion consists of a payment for alleged past damages in the amount of $6.05 billion, and a further payment representing the value to merchants of a temporary reduction in the level of interchange fees paid by merchants on Visa and MasterCard credit card transactions, estimated to have a value of $1.2 billion. The reforms of rules and business practices include modifications of network rules previously enforced by Visa and MasterCard relating to activity at the point-of-sale, as well as a new requirement that Visa and MasterCard negotiate with merchant-organized buying groups. The modification of these network rules will provide additional value to merchants of many billions of dollars by enabling merchants to provide greater transparency to consumers regarding the cost of using various types of payment methods, and permitting merchants to negotiate collectively over interchange fees and other aspects of their relationships with Visa and MasterCard. It is expected that the reforms required by the settlement will enable merchants to put pressure on Visa and MasterCard to limit or reduce interchange fees, among other things.
“The reforms achieved by this case and in this settlement will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of merchants and consumers,” states K. Craig Wildfang, who led the case for the Class Plaintiffs as co-lead counsel and partner at Robins, Kaplan, Miller & Ciresi L.L.P. “Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which in turn, will result in lower prices for all consumers.”
Martin R. Lueck, Chairman of the Executive Board at Robins, Kaplan Miller & Ciresi L.L.P. adds, “These reforms go a long way to achieving price transparency for the most heavily used form of payment in the United States, which will benefit consumers.”
“As an ecommerce business who has to rely on credit cards, this historic settlement and the reforms it brings will provide both immediate and lasting benefits for small merchants,” states Mitch Goldstone, President & CEO of ScanMyPhotos.com, a division of Photos Etc. Corporation.
The case is In re Payment Card Interchange Fee and Merchant Discount Litigation, 05-MD-1720 (JG)(JO). The other two co-lead counsel law firms that represent the class of merchants are Berger & Montague, P.C. and Robbins Geller Rudman & Dowd LLP.
About Robins, Kaplan, Miller & Ciresi L.L.P.
Robins, Kaplan, Miller & Ciresi L.L.P. ( http://www.rkmc.com ) is one of the top trial firms in the country. The firm’s clients include numerous Fortune 500 corporations, emerging markets companies, entrepreneurs, and individuals as both plaintiffs and defendants. Robins, Kaplan, Miller & Ciresi L.L.P. is frequently engaged in high-stakes, complex litigation with significant bottom-line implications for their clients, and the business lawyers handle complex transactions in a variety of market segments. The firm has more than 250 lawyers located in Atlanta, Boston, Los Angeles, Minneapolis, New York and Naples (FL).
Robins, Kaplan, Miller & Ciresi L.L.P. received The National Law Journal’s 2011 Pro Bono Award and was selected as a Pro Bono Firm of 2010 by Law360. The American Lawyer ranked the firm eighth in the country in the 2011 Pro Bono Survey, and twice named the firm to the A-List (2007 and 2004). The firm has regularly received a top ranking for litigation from Chambers USA and was chosen as a “Go-To Law Firm” by Corporate Counsel.
SOURCE Robins, Kaplan, Miller & Ciresi L.L.P.