By Jessica Dye
NEW YORK, Nov 1 (Reuters) - Nearly 1,200 retailers said on
Thursday they will urge a federal judge to reject a proposed
$7.2 billion settlement between merchants and Visa Inc and
Mastercard Inc over credit card fees, calling it an
"unacceptable" proposal that would strip away stores' legal
rights.
The proposed settlement was submitted in October for
preliminary approval by the court. If it receives first
preliminary and then final approval, it would be the largest
federal antitrust settlement in U.S. history, offering nearly 8
million merchants $7.2 billion in cash and temporary reductions
in the interchange, or swipe fees, that stores pay to process
credit and debit transactions.
Since it was first announced in July, the settlement has
drawn a vocal chorus of opponents, including 10 of the 19
retailers and trade groups appointed to lead the litigation on
merchants' behalf. Those opponents - which include the National
Association of Convenience Stores and the National Restaurant
Association - delivered a brief Thursday that asks U.S. District
Judge John Gleeson to reject the proposal.
Nearly 1,200 other merchants said in court filings that they
were unhappy with the deal and would submit multiple briefs
expressing their dissatisfaction. They range from some of the
best-known U.S. retailers, such as Wal-Mart Stores Inc
and Ikea, to small businesses and major trade groups like the
National Retail Federation.
"The declarations from about 1,200 merchants, small and
large, from every corner of the country, and every type of
merchant speak volumes about the fact that something is very
seriously wrong with this deal," said Jeff Shinder, a lawyer
representing the named plaintiffs opposing the deal.
Opponents said the settlement offers no meaningful reform to
swipe-fee rates. They have also blasted litigation releases that
would shield Visa and Mastercard from new lawsuits over swipe
fees.
"Fundamentally, these merchants and their representatives
object to the settlement because it will neither introduce
transparency nor give merchants the ability to inject
competition in a market that has not functioned competitively
for decades," objecting plaintiffs wrote in a court filing. "And
the release, given its scope, will make the competitive problems
in the marketplace worse for merchants, not better."
Visa, Mastercard and lawyers for stores that support the
settlement have said they are confident the court will approve
the deal. Trish Wexler, a spokeswoman for the Electronic
Payments Coalition, a trade group representing Visa and
Mastercard, has called the objections a transparent political
ploy by some merchants to force congressional action limiting
swipe fees for credit card payments.
In a brief order last week, Gleeson said that "at first
blush" the proposal meets the legal threshold for preliminary
approval, but he noted that the standard will be more stringent
for final approval.
A hearing on preliminary approval has been scheduled for
Nov. 9.
The case is In re Payment Interchange Fee and Merchant
Discount Antitrust Litigation, in the U.S. District Court for
the Eastern District of New York, No. 05-1720.
For the plaintiffs (co-lead class counsel): Laddie Montague,
Merrill Davidoff, Bart Cohen and Michael Kane of Berger &
Montague; Craig Wildfang, Thomas Undlin and Ryan Marth of Robins
Kaplan Miller & Ciresi; Patrick Coughlin, Bonny Sweeney, David
Mitchell, Alexandra Bernay and Carmen Medici of Robbins Geller
Rudman & Dowd.
For objecting plaintiffs: Jeffrey Shinder and Kerin Coughlin
of Constantine Cannon.
For Visa: Robert Vizas, Robert Mason and Mark Merley of
Arnold & Porter.
For Mastercard: Keila Ravelo, Wesley Powell and Matthew
Freimuth of Willkie Farr & Gallagher; Kenneth Gallo, Joseph
Simons, Andrew Finch and Gary Carney of Paul Weiss Rifkind Wharton & Garrison.
(A prior version of this story misspelled the name of one of
the law firms that represents Mastercard. It is Paul, Weiss, Rifkind, Wharton
& Garrison).
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