Payment-card giant Visa (NYSE:V) sued retail giant Walmart (NYSE:WMT) on Wednesday (June 12), asking a federal judge in Brooklyn, N.Y., to declare that the that card brand has not violated antitrust laws.
In its complaint, Visa made largely the same arguments it made in a similar lawsuit in May against retailers and trade groups who opposed the $7.25 billion interchange settlement that's reaching its final stages this summer. In both cases, Visa asked the court to declare that Visa's default interchange rates, "honor all card" rules and 2008 IPO do not violate either federal or state antitrust laws.
And, like the previous case, Visa is suing Walmart because it expects the retailer to sue Visa. Walmart made public statements to that effect after it opted out of the interchange settlement in May.
For those trying to keep track, there are now four lawsuits that have been launched since May 23 that directly raise the "Are Visa's practices legal?" question. That's the date when Target (NYSE:TGT) and 16 other big chains sued Visa and MasterCard (NYSE:MA) in federal court in Manhattan, N.Y., arguing that the card brands' do indeed violate antitrust laws.
The following day in federal court in Brooklyn, Visa and MasterCard sued several of the named plaintiffs in the interchange lawsuit who opted out of the settlement. The card brands said then that they expected those retailers to sue them. On May 27, drugstore chain CVS (NYSE:CVS) sued Visa and MasterCard in the Brooklyn court, claiming that Visa and MasterCard conspired with card-issuing banks in order to charge excessive and anticompetitive fees for processing payment cards. Finally (at least so far), there's Wednesday's suit by Visa against Walmart.
At this point it's unclear how strong any of these lawsuits (or the inevitable countersuits) may be legally. What is clear is that U.S. District Judge John Gleeson, who is overseeing the interchange settlement, faces a significant problem. Many of the biggest retailers covered by the class-action settlement—and covered by parts of it whether they want to be or not—are raising serious antitrust questions that the settlement was specifically intended to avoid airing in court.
Those lawsuits will likely take months just to get through the early stages of complaint and response. But Judge Gleeson is scheduled for a Sept. 12 hearing on the fairness of the settlement, after which he'll have to give it final approval or not. The judge clearly would prefer for the settlement process to run its course and never see the participants again after September. That may no longer be possible, but Judge Gleeson should at least get part of what he wants: Some of those antitrust arguments are currently scheduled to be in somebody else's courtroom.
- See this Businessweek story
Walmart, Amazon, 60 Other Chains Make Their Anti-Interchange Settlement Case
Visa Sues To Get A Get-Out-Of-Antitrust-Free Card; First Data Just Wants Out
Target, Macy's, 15 Others Sue Visa And MasterCard For Antitrust