With a week to go before the deadline for merchants to opt out of the $7.25 billion interchange settlement, a group of major retailers said on Tuesday (May 21) that they're not playing, according to Dow Jones.
Walmart (NYSE:WMT), Costco (NASDAQ:COST), Starbucks (NASDAQ:SBUX), Gap (NYSE:GPS), Lowe's (NYSE:LOW), 7-Eleven and Nike (NYSE:NKE) filed paperwork with the U.S. District Court in Brooklyn that's handling the case, all saying both that they objected to the settlement and that they were opting out. The group also said its members were considering "additional legal action to recover damages from Visa (NYSE:V) and MasterCard (NYSE:MA) under U.S. antitrust laws."
One of the key points in the settlement is that Visa and MasterCard won't be subject to future interchange-related litigation.
K. Craig Wildfang, one of the attorneys who negotiated the settlement, told Bloomberg he wasn't surprised by the announcement from Walmart and the other chains. "These merchants have been publicly critical of the settlement, and we always thought that many of them were likely to opt out," Wildfang said. "We remain confident that the vast majority of merchants in the class will not opt out."
Since "merchants in the class" includes anyone that has taken a Visa or MasterCard payment since 2004—an estimated 8 million retailers and other organizations—that's an easy claim to make. Even if 800,000 retailers individually opted out of the settlement in the next week (which would effectively qualify as a denial-of-service attack against the court's electronic filing system), that would still leave 90 percent of merchants who haven't opted out.
More significant than the percentage of opt-outs will probably be the repeated claims that the class-action settlement is unfair to merchants and violates their legal rights by blocking them from future antitrust lawsuits against Visa and MasterCard. The final step in the approval process for the settlement is a "fairness hearing" on Sept. 12, when Judge John Gleeson will decide how much weight to give those arguments.
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