As expected, U.S. District Judge John Gleeson approved the proposed $5.7 billion class-action settlement in the underlying credit card swipe fees case between merchants and Visa/MasterCard. In his order on Friday afternoon, Judge Gleeson explained that he was satisfied with the settlement.
NACS filed private antitrust litigation against the major credit card companies and banks in 2005. Counsel for the class of merchants in that case reached a proposed settlement with the defendants in 2012, but it is woefully inadequate. The proposed settlement would give merchants a limited right to surcharge that is too complex to implement and would allow the credit card companies to continue to set prices for their member banks. Furthermore, the proposed settlement would do nothing to give merchants competitive network routing choices, and also lock-in many anti-competitive activities of the credit card companies forever.
NACS led opposition to the proposed settlement, opting out of and objecting to it, and was joined by dozens of trade associations and thousands of retail companies.
The U.S. District Court held a fairness hearing in New York on the settlement on September 12, where NACS President and CEO Henry Armour said that the settlement is worse than losing at trial.
“Losing would not bar the courthouse door to merchant challenges to future unfair card industry practices including current bad practices being applied to new technologies like mobile payments. The settlement provides nothing of any real value beyond the money. And the scope of the release will allow the Defendants to raise rates and recoup the money before it is even distributed to merchants, which is precisely what happened in the Visa check case,” Armour said at the fairness hearing.
NACS is appealing the decision — stay tuned to NACS Daily for updates.