U.S. sues three credit-card issuers, settles with two

WASHINGTON - The Justice Department on Monday sued the three largest U.S. credit-card companies for anticompetitive practices but reached a proposed settlement with two of them, MasterCard and Visa.

The department and various state attorneys general in federal court in Brooklyn sued all three companies, saying they were attempting to insulate themselves from competition.

At the same time, the Justice Department filed a settlement it has reached with Visa and MasterCard.

The settlement is designed to give merchants more freedom to influence customers on what form of payment they choose, letting retailers offer discounts, rebates or enhanced services depending on what card customers use. That practice had been prohibited by contracts offered by the credit-card networks.

Visa said the networks won't make any payments under the settlement.

Assistant Attorney General Christine Varney said the government remained open to a settlement with American Express, whose rules she called "the most restrictive."

"We have no intention of settling the case," American Express chief executive Kenneth I. Chenault said. Company spokesman Michael O'Neill said it was hiring attorney David Boies to handle its defense against the lawsuit.

Joining the suit were Maryland, Connecticut, Iowa, Michigan, Missouri, Ohio and Texas.