Judge approves settlement with retailers over swipe fees | Business ...

Retailers are disappointed to hear U.S. Court Judge John Gleeson gave preliminary approval of the swipe fee settlement after hearing arguments in Brooklyn, N.Y. on Friday (Nov. 9).

Little-Rock-based Dillard?s was one of a dozen retailers who asked the court to reconsider the settlement on Nov. 1 based on the legal flaws.

But the court looked beyond that argument on Friday and granted preliminary approval of the class-action settlement which stems from an antitrust lawsuit over the $30 billion annual credit card swipe fees charged by Visa and MasterCard.

?We respectfully disagree with the court?s assessment of the proposed settlement,? said Mallory Duncan, general counsel for the National Retail Federation. ?We do not believe the proposal meets the legal tests required to meet even preliminary approval. Retailers, their customers and competition would suffer irreparable harm if this one-sided deal is allowed to move forward. We will consult with our attorneys and act as soon as possible to correct this injustice.?

Wal-Mart never supported the $7.25 billion settlement offered by the court and urged other retailers to reject it as well.

?The proposed settlement would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year. The proposed settlement would require merchants to broadly waive their rights to take action against the credit card networks for detrimental conduct or acts. We believe the proposed settlement would also constrain emerging payments innovation. As Wal-Mart continues to seek reform that will provide transparency and true competition among financial institutions, we encourage all merchants to put consumers first and reject the settlement,? according to a statement on Wal-Mart?s corporate website.
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Duncan says the proposal benefits no one but the attorneys involved. Retailers have argued the settlement? does not bring about any reform, but it does put the credit card companies beyond the reach of the law for any future indiscretions on pricing strategies.

NRF is not a party to the lawsuit, but its members and the companies named in the brief would be affected if the case is approved as a class action. Arguments were also heard on briefs filed by other opponents, including retailers and associations who were parties to the suit but who have rejected the proposal.

NRF opposes the settlement because it fails to reform the cartel-like system where Visa and MasterCard set a rigid schedule of swipe fees that all banks follow. The trade group says while merchant bargaining groups could be recognized and while some merchants would theoretically be given the right to surcharge as a bargaining chip to hold down fees, the provision is subject to a wide variety of card company restrictions. It is also illegal in 10 states, and ignores the goal of merchants to reduce prices paid by their customers, according to Duncan.

While the $7.25 billion figure has been touted as a record antitrust settlement, NRF and its members believe effective injunctive relief that would keep fees from rising going forward is more important. The amount represents less than three months? worth of swipe fee collections despite the eight-year period covered by the lawsuit.

Source: http://www.thecitywire.com/node/25071

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