REI, Foot Locker and Nike joined the parade of major retailers bailing out of a proposed multi-billion-dollar settlement of an eight-year-old federal anti-trust lawsuit alleging Visa Inc. and Mastercard used anti-competitive tactics to set swipe fees.
The three companies were among 19 that announced May 21 they would not participate in the settlement and were considering their legal options. Members of the group, which included Walmart, Costco, Gap Inc., and Dillards, said they rejected the settlement because it requires merchants give up their right to sue the credit card payment networks in the future should they continue to engage in anti-competitive behavior.
The proposed settlement would divvy up $7.25 billion among more than 7 million U.S. retailers allegedly harmed by anti-competitive tactics. Retailers have until Tuesday, (May 28) to opt of the settlement or automatically be considered to have accepted its terms, which bar them from filing future lawsuits over the fees and other restrictive rules. Given their lack of legal resources, millions of independent retailers are expected to participate in the settlement.
On Friday (May 24), Luxottica Group SPA, Target, Macys and a dozen other national retailers who had already dropped out of the settlement, filed a new lawsuit against Visa and Mastercard in New York alleging many of the same anti-trust allegations. Such new litigation could result in billions of dollars in additional damages, covering all Visa and MasterCard transactions processed by those merchants from Jan. 1, 2004 through to Nov. 27, 2012.
The proposed settlement does nothing to bring swipe fees under control and would give Visa and MasterCard a legal blessing to continue their abuse of merchants and consumers indefinitely, said Mallory Duncan, SVP and general counsel for the National Retail Federation. No settlement at all would be better than this one-sided ‘agreement written by the card companies for the card companies that would tie retailers hands for decades to come.
