Robbins Geller Rudman & Dowd LLP Announces Historic Settlement in Credit Card Interchange Fee Case
Largest antitrust settlement ever secures billions for retailers, enhances competition, and mandates new transparency that empowers consumers to make informed choices
San Diego, CA, July 13, 2012 – Robbins Geller Rudman & Dowd LLP (“Robbins Geller”) announced today the largest antitrust settlement in history. If approved, the settlement will create a fund of up to $7.25 billion available to approximately seven million merchants to settle claims that Visa, MasterCard and more than a dozen of the nation’s largest banks conspired to restrain competition. Plaintiffs claimed that the “interchange fee” – a fee that goes from the merchant to the issuing bank – was illegally set by the banks that, until recently, controlled Visa and MasterCard.
The settlement also requires Visa and MasterCard to modify their merchant rules and frees retailers to encourage consumers to use cheaper forms of payments. “These new rules will give merchants the tools they need to put pressure on the credit card networks to lower interchange or ‘swipe’ fees, which are the second or third highest cost of doing business for many retailers,” said Patrick J. Coughlin, senior trial counsel at Robbins Geller and one of the lawyers for the plaintiffs. “Reducing these fees will reduce costs, ultimately resulting in lower prices for consumers,” he added.
Visa, MasterCard and the banks, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and other major banks, have agreed to establish a fund of $6.05 billion to pay merchant claims. In addition, Visa and MasterCard will reduce interchange, or “swipe,” fees that would otherwise be paid by merchants on Visa and MasterCard credit card transactions over an eight-month period while the new rules are implemented. The settlement still needs preliminary approval from the court. This pool of reduced “swipe” fees is valued at approximately $1.2 billion.
“This is an historic settlement. In addition to refunding billions of dollars to retailers that paid artificially inflated interchange fees, the reforms will create real price competition, leading to reduced card-acceptance fees for retailers,” said Bonny E. Sweeney, the firm’s senior antitrust partner and its principal litigator in the case.
If approved, this settlement will represent the largest ever recovery in an antitrust case and will be the second largest class action settlement ever. Robbins Geller, co-lead counsel in this case, was sole lead counsel in the Enron case, which resulted in the largest class action settlement in history.
The complexity of this case was enormous and the consequences of the settlement far reaching. It took more than a year to negotiate the settlement among the dozens of parties to the suit and was achieved with the assistance of seasoned mediators Professor Eric Green and the Hon. Edward Infante, Ret.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, MD-05-1720 (JG) (JO), and is pending in the Eastern District of New York. Robbins Geller is co-lead counsel for the plaintiffs, together with Robins Kaplan Miller & Ceresi, L.L.P. and Berger & Montague, P.C.
About Robbins Geller Rudman & Dowd LLPRobbins Geller represents U.S. and international institutional investors in contingency-based complex litigation. With nearly 200 lawyers in nine offices, the firm represents hundreds of public and multi-employer pension funds with combined assets under management in excess of $1.5 trillion. The firm has obtained the largest recoveries in history in six of the eight categories of shareholder class action settlements and has been ranked number one in the number of shareholder class action recoveries in MSCI’s Top SCAS 50 every year since 2003. According to Cornerstone Research, the firm’s recoveries have averaged 35% above the median for all firms over the past seven years (2005-2011).