US top court rejects bid to revive $7.25 billion credit card settlement
The Supreme Court declined to hear a bid by retailers to revive a $7.25 billion antitrust settlement they reached with Visa Inc and Mastercard Inc over claims the card networks improperly fixed credit and debit card fees.business Updated: Mar 27, 2017 20:14 IST
The U.S. Supreme Court on Monday declined to hear a bid by retailers to revive a $7.25 billion antitrust settlement they reached with Visa Inc and Mastercard Inc over claims the card networks improperly fixed credit and debit card fees.
The high court left in place a 2016 lower court decision that threw out the settlement on the basis that it was unfair to retailers that stood to receive no payments and derive no other benefits.
The brief Supreme Court order noted that Chief Justice John Roberts and Justice Samuel Alito did not participate in consideration of whether to take up the appeal. No reason was given.
The settlement had been intended to resolve claims that merchants were overcharged on interchange fees, or “swipe fees,” when shoppers used credit or debit cards, and were barred from directing customers toward cheaper means of payment.
The deal had been the largest all-cash U.S. antitrust settlement, although its value shrank to about $5.7 billion after roughly 8,000 retailers “opted out.”
The New York-based 2nd Circuit U.S. Court of Appeals found that the accord was unfair to retailers that stood to receive no payments and, in the court’s view, little or no benefit at all. It also decertified the case as a class action.
The circuit court’s decision was a blow to the credit card industry, which hoped the settlement would end a decade of litigation brought on behalf of about 12 million retailers against Visa, MasterCard and banks that issue their cards.
Companies including Amazon.com Inc, Costco Wholesale Corp and Wal-Mart Stores Inc opposed the settlement and challenged it on appeal. Card issuers American Express Co and Discover Financial Services also objected to the settlement.
A federal judge in Brooklyn had approved the settlement in 2013, saying it offered significant damages and meaningful protections against future harm.
Many retailers and trade groups objected. Some said the payout should have been higher while others said the settlement would have made it too difficult to sue Visa and MasterCard.
According to the National Retail Federation trade group, retailers pay roughly $60 billion annually in swipe fees, which typically average around 2 percent.
Card-issuing banks would have funded much of the settlement. JPMorgan Chase & Co and Bank of America Corp had estimated they were responsible for roughly one-fifth and one-tenth, respectively, of a payout.
First Published: Mar 27, 2017 20:14 IST