FMI Asks Supreme Court Not to Give Credit Card Firms Shelter

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FMI Asks Supreme Court Not to Give Credit Card Firms Shelter

11/15/2005
WASHINGTON-- On Nov. 10, the Food Marketing Institute (FMI) filed an amicus brief urging the U.S. Supreme Court to reject an invitation from Visa to create an antitrust safe harbor that would allow Visa and MasterCard to continue to fix credit and debit card interchange fees with their owner and member banks, reported NACS online.

FMI joined the Retail Industry Leaders Association (RILA) in the filing the friend-of-the-court brief concerning the case of Texaco v. Dagher, et al. The case involves joint price setting in a Texaco and Shell Oil Co. joint venture.

According to FMI, if the Supreme Court were to endorse the broad antitrust immunity sought by Visa in its own amicus filing, the decision could undermine more than 40 pending cases, including class actions, challenging the fees under Section 1 of the Sherman Act, according to the report.

FMI alleges that credit card companies and their member banks set interchange fees with no regard for the merchants and, ultimately, the consumers who pay them. The fees have increased steadily over the past 10 years. In 2004, Visa, MasterCard, and their member banks collected more than $26 billion in interchange fees, according to FMI.

Visa argues that its and MasterCard’s practice of having their member banks collectively fix the price of interchange on every debit and credit transaction should be immune from challenge under Section 1 of the Sherman Act, NACS online reported.

FMI told the court that the fees are nothing more than "blatant exercises of market power" and continue to "increase at enormous cost to merchants and consumers."

Meanwhile, the National Grocers Association (NGA), three of its members and the Minnesota Grocers Association announced they are filling an antitrust lawsuit against Visa, MasterCard and several banks alleging they are engaging in "illegal collusive practices" in setting their credit card interchange fees at "supra-competitive levels," reports SupermarketNews.com.

The Web site notes the lawsuit appears to be similar to several others filed by larger chain retailers against the credit card issuers, such as the lawsuit filed by NACS.