Seventeen major retailers, including Macy’s, Target, and Kohl’s, filed an anti-trust suit yesterday in New York City to protest Visa and MasterCard’s lack of transparency when they set credit card swipe fees.
Bloomberg Businessweek reported on the collusion that the credit card companies are said to be engaged in:
The biggest U.S. payment card firms illegally restrained competition for interchange fees by setting default rates and imposing almost identical rules for accepting cards, the retailers said yesterday in a federal court complaint in New York.
The retailers in the suit decided to “opt out” of a $7.5 billion court ruling from last November that would settle, finally and forever, an eight-year legal battle brought by retailers against the credit card giants. The settlement, the largest in anti-trust history, would still allow Visa and MasterCard to adjust fees in the future without disclosure or transparency, according to the new lawsuit. In addition the settlement would require the retailers to sign off on ever filing lawsuits over those fees, thus protecting the card companies from other anti-trust lawsuits in the future. It would, in effect, guarantee the existence of a cartel without interference.
By opting out, the retailers are hopeful that the new lawsuit will be able to force the card companies to be more transparent and to allow banks and other financial institutions to compete by offering other cards with lower fees. Although the world’s largest retailer, Walmart, didn't join in the suit, observers are predicting it will file its own separate suit against the card companies.
Click here to read the entire article.