This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.
The federal district court in Brooklyn, New York, has agreed to hear oral argument on a motion for preliminary approval of a proposed settlement that would resolve antitrust claims brought on behalf of approximately seven million merchants against Visa, MasterCard, and other major U.S. financial institutions over credit card swipe fees (In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, October 24, 2012, Gleeson, J.).
The settlement would provide an estimated $7.25 billion to the merchants who accepted Visa and MasterCard credit cards and debit cards in the United States since 2004. It would resolve the merchants’ claims that the payment card networks violated federal antitrust law by artificially inflating the interchange fees that the merchants paid on payment card transactions. The settlement before the court is considered to be the largest ever in a private antitrust case.
Noting that he did not ordinarily schedule oral argument of preliminary approval motions, Judge John Gleeson said that there was "an expectation among some interested parties that the preliminary approval process should be more involved in this case than in the usual class action." The court said, however, that the settlement agreement "at first blush . . . appears to satisfy the threshold requirements for preliminary approval."
The court is moving swiftly in its initial review of the settlement in the seven-year-old case. Oral argument has been scheduled for November 9.
The court denied requests from a large group of retailers and merchants for the formation of an objectors’ committee or to arrange for additional discovery. "The parties seeking that relief have a great deal of sophistication and familiarity with both the terms of the Settlement Agreement and the course of the negotiations that culminated in that agreement," the court said.
In addition, the court refused to establish procedures for absent class members to intervene at this juncture. They would have ample rights to be heard before final approval of the settlement was considered, the court explained.
The National Retail Federation is among the vocal opponents of the settlement. The trade group has said that the settlement is “unfair” and "does virtually nothing” to protect customers and address retailers’ concerns about credit card swipe fees charged by Visa and MasterCard.