Despite holding the option to back out, leading credit card companies Mastercard Inc. and Visa Inc. plan to move forward in pursuit of a multibillion-dollar antitrust settlement with leading U.S. merchants.
U.S. retailers accounting for more than 25 percent of the total volume of credit card purchases have decided to drop out of the settlement, triggering a clause that would allow Visa and Mastercard to also opt out. However, the companies decided against exercising the clause.
“The defendants as a group had the right to terminate the settlement agreement because the volume threshold of 25 percent was exceeded, but elected not to do so,” Mastercard President and CEO Ajay Banga said in a July 31 conference call with investors.
The card companies will proceed in attempting to end an eight-year long legal battle over a suit brought by millions of U.S. companies that accept credit card purchases. The retailers claim the credit card companies fixed rates on the interchange fees paid by card-accepting retailers. The initial settlement was estimated at $7.25 billion, according to Bloomberg.
Dozens of major retailers, including Wal-Mart Stores Inc., have called the settlement unfair and urged other retailers to reject it. Almost 8,000 businesses in total have opted out of the settlement and filed their own suits against the card companies. Lawyers for the class of U.S. retailers say the settlement will now be reduced by $1.25 billion because of the retailers that dropped out.
The settlement received its initial approval last November and is subject to a final approval in federal court in Brooklyn on Sept. 12.
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