In In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Eastern District of New York Judge John Gleeson preliminarily approved a $7.25 billion settlement in multi-district litigation alleging that the credit card companies collusively set the fees that they charge merchants to accept cards.
Judge John Gleeson explained that class action settlements must be approved at the preliminary stage if they meet a relatively modest threshold. He thus rejected the objections from more than 1000 merchants and trade associations, including some of the largest class members, describing their concerns as “overstated.” They claimed that although the cash value of the settlement appears high (a $6.05 billion payment to merchants and an eight-month fee discount valued at approximately $1.2 billion), relative to the card associations revenues it is not and, more importantly it does not do enough to permit competition on merchant fees going forward. The court identified as a significant point of disagreement the value of the provision in the settlement permitting merchants to surcharge customers who use cards. “You can’t all be right,” Judge Gleeson stated, “about the value of that proposed rule change.” And he suggested that he may appoint an expert to examine the issue before deciding whether to issue final approval.
In addition, the plaintiffs in a class action in the District of Columbia have urged the court to clarify that the proposed settlement applies only to merchant fees and not to fees charged to ATM operators. Although both types of fees are commonly referred to as interchange fees, the ATM plaintiffs argue that the fees serve different purposes and that the issues are entirely distinct. The District of Columbia cases are National ATM Council Inc. et al. v. Visa Inc. et al.; Barton et al. v. Visa Inc. et al.; and Stoumbos v. Visa Inc. et al.
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