Judge Signals Dismissal of Swipe Fee Settlement
NATIONAL REPORT — The proposed $30 billion settlement of a class-action antitrust lawsuit over credit and debit card fees charged to merchants appears to face imminent dismissal.
During a June 13 hearing held by the U.S. District Court for the Eastern District of New York, Judge Margo Brodie stated that she will "likely not" approve the settlement, which has garnered a significant number of objections from retail industry groups.
Judge Brodie will write an opinion explaining her decision and reasoning, reported Reuters.
[Read more: Retailers Ask Judge to Reject Swipe Fee Settlement]
Objectors to the settlement, which included the National Retail Federation, the Merchants Payments Coalition (MPC) and NACS among others, previously criticized it for providing only short-term relief and freeing Visa and Mastercard to raise swipe fee rates without limit after five years.
Under the terms of the proposed settlement, Visa and Mastercard would reduce rates for each swipe fee category by 4 basis points (0.04 of 1 percentage point) for three years and average rates by 7 basis points for five years. However, because credit card swipe fees currently average 2.26% of the transaction or 226 basis points, many trade groups view the relief as insufficient.
The MPC applauded news of the settlement's likely rejection, calling the deal a "sham" that would have locked in cartel pricing and made the situation worse.
"The judge made a strong statement in support of justice for merchants and consumers," said MPC Executive Committee member and National Grocers Association Senior Vice President of Government Relations and Counsel Christopher Jones. "We appreciate that there was recognition of the fatal flaws that would have made the settlement a bad deal for Main Street rather than a correction of credit card industry violations of the antitrust laws. It’s past time for Congress to pass the Credit Card Competition Act to fix this broken market."
Jones highlighted the number of objectors, noting that "every major merchant group" has expressed opposition to the settlement.
"We need competition to fix this broken market and that means passing the Credit Card Competition Act," he said.