The gloves have come off in the fight over the $7.25 billion interchange settlement. On Friday (May 24), Visa (NYSE:V) and MasterCard (NYSE:MA) filed a federal lawsuit asking for a declaration that their card and interchange rules don't violate antitrust law. The same day, card processing giant First Data lined up with retailers against the settlement—specifically because it shields the card brands from future antitrust lawsuits.
The Visa/MasterCard suit is nominally against several named plaintiffs in the interchange settlement who opted out and threatened to file antitrust lawsuits against the card brands. It asks the court to declare that Visa and MasterCard's default interchange rates, "honor all card" rules, and rule-enforcement procedures "did not violate federal antitrust law or the antitrust laws of the several States or the District of Columbia."
That's essentially a mirror-image version of an antitrust lawsuit filed on Thursday (May 23) by Target (NYSE:TGT) and 16 other big chains, who argue that all those things do violate federal antitrust law.
Also on Friday, First Data officially opted out of the settlement and took the unusual step of asking U.S. District Judge John Gleeson to let it make an oral argument in the case. The settlement "would force First Data Corporation and its affiliates and subsidiaries to release defendants Visa and MasterCard, both of whom have a long history of defending—and losing or settling—numerous antitrust lawsuits and investigations, from future antitrust and other claims against them," First Data said in a legal filing.
The processor isn't a conventional merchant but has to formally opt out because of an "overly broad class definition" that includes First Data only because it accepts Visa and MasterCard payments from "employees buying lunch in the company cafeteria, paying for shipping services in the company mailroom, or making charitable donations to the company's charitable foundation," the filing said.
But the terms of the settlement block First Data from opting out completely, and that "could forever bar [First Data] from questioning hundreds upon hundreds of rules and regulations that affect more than half of its multi-billion dollar business," the filing said. That violates First Data's constitutional due-process rights and is not fair, reasonable or adequate, according to the filing.
Whether First Data will get its day in court, and whether the card brands will get their get-out-of-antitrust-free card, are yet to be seen. But there's clearly a lot more shouting to come before the final "fairness hearing" on the settlement Sept. 12.
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