A federal judge has approved the historic $7.25 billion antitrust settlement between more than 8 million retailers and Visa, MasterCard and major U.S. banks.
U.S. District Judge John Gleeson in Brooklyn blessed the accord over virulent objections of some of the country's largest retailers and major industry associations. Gleeson's 55-page memorandum and order, filed Friday, contained sharp words for the objectors, one of whom he said likened Visa and MasterCard to "modern-day Nazis" at the fairness hearing in September.
"But in reality the vitriol and poor behavior and feigned hysteria mask complex and difficult issues on which reasonable merchants can and do disagree," Gleeson wrote.
Gleeson noted that the sweeping relief some retailers demand goes beyond the scope of the litigation and ignores that despite its enormous size, "this is just an antitrust lawsuit."
That said, it's the largest class-action antitrust settlement in U.S. history.
The settlement was announced in the summer of 2012 after seven years of litigation over claims the networks and banks colluded to illegally fix the high "interchange" fees they charge merchants when shoppers swipe a Visa or MasterCard card. The first lawsuit was filed in Minnesota in 2005 by K. Craig Wildfang, a prominent antitrust litigator at Robins Kaplan Miller & Ciresi in Minneapolis who ultimately quarterbacked the national settlement.
The agreement permits merchants to surcharge customers paying with Visa and MasterCard cards, and requires Visa and MasterCard to negotiate with merchant buying groups seeking lower fees, among other things.
It also calls for the defendants to pay cash damages to the more than 8 million affected retailers, although the individual payments will be a small fraction of the total interchange fees the retailers have paid over the years. Interchange fees average about 2 percent of a purchase price.
The estimated $7.25 billion the defendants agreed to pay has shrunk to about $5.7 billion because some retailers who opted out of the deal.
Scores of major retailers and their trade organizations have fought the settlement as doing too little to check the market power of Visa and MasterCard and giving too broad a release from future lawsuits. Several have already filed notices of their intent to appeal, including a group of 21 retailers that includes Target Corp., Macy's Inc. and Staples Inc.
The Retail Industry Leaders Association said it's considering an appeal.
"The retail community remains committed to fighting this flawed settlement and addressing the fundamental lack of competition in the electronics payments market," said Deborah White, the group's general counsel. "Quite simply, the proposed settlement undermines merchants' legal rights forever and fails to restrain Visa and MasterCard's ability to impose higher and higher swipe fees with impunity."