Federal Judge Rejects $30 Billion Antitrust Settlement Between Mastercard and Visa
A federal judge in New York, U.S. District Judge Margo Brodie, has rejected a $30 billion antitrust settlement between Mastercard and Visa. The settlement, which was announced in March, involved the two credit card companies agreeing to limit fees charged to retailers who accept their debit and credit cards. Judge Brodie stated that she is unlikely to grant final approval of the settlement and has denied the companies’ request for preliminary approval.
The decision comes after a number of trade and merchant groups opposed the settlement, arguing that the fees charged by Visa and Mastercard would still be too high and that the two corporations would retain too much control over the industry. These fees, known as interchange fees, range from 1.5 to 3.5 percent and amounted to approximately $172 billion in 2023, according to the Nilson Report.
Critics of the settlement, including the Merchants Payments Coalition, praised Judge Brodie’s earlier indication that she would rule against the companies. They argued that the proposed settlement would not address the issue of centrally fixed swipe fees and would only lock in cartel pricing. Christopher Jones, the head of the Merchants Payments Coalition, called for Congress to pass the Credit Card Competition Act to fix what he described as a broken market.
Under the rejected settlement, swipe fees would have been reduced for three years, with a cap on rates for five years. It was estimated that merchants would save around $29.79 billion as a result. Visa claimed that the settlement would address the concerns of small businesses, while Mastercard stated that it would ensure no fee increases for five years and encourage competition and innovation.
Critics, including the National Retail Federation, argued that the settlement would only provide temporary relief for merchants and would make it difficult for them to mount future challenges against Visa and Mastercard. The settlement included a provision that would ban future merchant litigation over swipe fees and did not offer an opt-out provision for merchants who disagreed with its terms.
Neither Visa nor Mastercard has issued a public statement on the judge’s ruling. The decision by Judge Brodie highlights the ongoing debate and legal battles surrounding interchange fees and the influence of credit card companies in the industry.
