Today's the day. A fairness hearing over the $5.75 billion interchange settlement that would block merchants from suing Visa (NYSE:V) and Mastercard (NYSE:MA) is scheduled for today (Sept. 12) in a Brooklyn, N.Y., federal courtroom.
The hearing, before U.S. District Judge John Gleeson, may be the final step in the case if Gleeson gives final approval to what has become a controversial settlement proposal. Major retailers, including those responsible for more than 25 percent of all credit- and debit-card payment volume in the U.S., have rejected the settlement, many explicitly because it would bar them from suing the card brands and card-issuing banks in the future over their rules, which the retailers argue violate antitrust laws.
Although those retailers opted out of the settlement, they will still be bound by the no-lawsuits ban if the settlement is approved. So would any retailer or other organization that accepts Visa or MasterCard cards, presumably including the federal government.
However, Macy's (NYSE:M), Target (NYSE:TGT), and more than a dozen other large retailers have already filed a separate antitrust lawsuit against Visa and MasterCard. For its part, Visa sued Walmart (NYSE:WMT), asking the court to declare that it doesn't violate antitrust laws.
A court-appointed economist said in his report in August that the monetary terms of the settlement were probably the best the merchants could hope for, but he suggested that the court should consider changing the part of the settlement that would release Visa and MasterCard from liability. "Litigation 'peace' need not include protection from liability for new and different violations of the law," Alan O. Sykes, an economist and law professor at New York University, wrote in his report to the judge.
That recommendation may have more of an impact on the judge's decision than the complaints of the large retailers, most of whom are not named plaintiffs in the class-action lawsuit. (To be clear, most of those named plaintiffs are also on record as opposing the settlement.)
After the hearing, Judge Gleeson is expected to make a decision in 30 to 120 days.
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