Retailers React as Judge Rejects Swipe Fee Settlement
NATIONAL REPORT — Multiple retail industry groups expressed support for the formal rejection of a proposed $30 billion settlement of a class-action antitrust lawsuit over credit and debit card fees charged to merchants.
U.S. District Court Judge Margo Brodie formally issued her ruling on June 25, less than two weeks after stating she was unlikely to approve the settlement, which industry advocates have criticized for providing short-term relief and freeing Visa and Mastercard to raise swipe fees without limit thereafter.
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Judge Brodie's decision could force parties to negotiate a settlement more favorable to merchants or continue to trial, reported Reuters. She plans to issue a written opinion explaining her reasoning after giving the card networks and merchants until June 28 to request redactions.
"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," said Christopher Jones, executive committee member of the Merchants Payments Coalition (MPC) and National Grocers Association (NGA) senior vice president of government relations and counsel.
The MPC again urged Congress to pass the Credit Card Competition Act.
"Visa and Mastercard wanted a settlement that would let them keep price-fixing swipe fees and blocking competition," Jones said. "Thankfully, the judge made the right call in recognizing what a bad deal this would have been for Main Street merchants and their customers. It's extremely unusual for a judge to reject a settlement at the preliminary stage, so this shows how far Visa and Mastercard's proposal missed the mark."
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The National Retail Federation joined in applauding the dismissal, calling the settlement a "backroom deal" that stood in the way of relief from constant fee increases that drive up costs for small businesses and costs for American families.
"This settlement was never agreed to by the retail industry as a whole and would have done nothing to end anticompetitive practices and fix our nation's broken payments market," said NRF Chief Administrative Officer and General Counsel Stephanie Martz. "The proposed reduction in swipe fees was tiny and temporary and ignored the underlying issue of how these fees are centrally set rather than allowing banks to compete to offer the best rates."
Retail Industry Leaders Association (RILA) stated that while the settlement agreement proves that merchants deserve injunctive relief, the ensuing rule changes must level the playing field for all parties.
"The proposed settlement did nothing of the kind. Leading retailers are relieved the settlement deal has been rejected so that the next steps in this long-fought legal battle can move forward," RILA noted in a released statement.
"And while the wheels of justice continue to churn in this case, make no mistake that today's rejection of the flawed proposed rules changes doesn't in any way lift Congress's responsibility to fix the anticompetitive credit card market. The credit card payment system will remain dysfunctional until federal legislation is passed. Congress should not allow this case to be a distraction from passing the Credit Card Competition Act to bring true competition to a broken market," the association added.