Retail associations are urging the U.S. Supreme Court to reject an attempt to revive a $7 billion settlement over allegedly fixed credit card swipe fees, arguing the “backroom deal” would have done nothing but benefit banks.
The National Retail Federation and the Retail Leaders Industry Association, along with other merchant groups, told the high court that a Second Circuit ruling last year striking down a $7.25 billion settlement only benefited Visa and MasterCard.
“The circuit court did the right thing in tossing this case out and it should not be revived,” said NRF senior vice president and general counsel Mallory Duncan. “This alleged ‘settlement’ was a backroom deal that would have done nothing to end price fixing or keep swipe fees from soaring in the future.”
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She went on to point to a claims release in the 2012 settlement at issue that prohibits a broad swath of merchants, many of which opposed the deal, from bringing any antitrust claims over swipe fees again.
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“There are ways to bring swipe fees under control but this settlement is not one of them,” Duncan added.
The settlement at issue stems from a 2005 lawsuit alleging that credit and debit card swipe fees were basically the result of industry price-fixing, because Visa and MasterCard set the fees for thousands of banks, eliminating market competition.
Although the settlement offered a monetary payout for retailers that had been affected by the swipe fees, instead of lowering swipe fees going forward, the NRF said the arrangement merely proposed that the cost be “passed along” to shoppers as a surcharge.
Despite opposition from the NRF and other retail and consumer groups and retailers, a New York judge approved the deal anyway.
After the NRF succeeded in convincing the Second Circuit to block the deal, which the court found to offer little more than “permanent immunity” from scrutiny of possibly anticompetitive fee practices, merchants who favored the settlement petitioned the Supreme Court to weigh in, citing the “importance” of the settlement.
But the NRF and RILA shot back in a Tuesday response to the petition, saying “the settlement itself achieved nothing important for merchants that accept credit cards.
“The chief victors are defendants, who hoped they bought litigation peace and the assurance that their unlawful practices will never be challenged, for the price of the $7 billion settlement,” the associations said.
They added that attorneys for the merchant classes on the receiving end of the settlement naturally are in favor of the deal as well, considering they’re set to receive $545 million in fees.
The Supreme Court has yet to decide whether it will take up the case.
Counsel for petitioners could not be reached immediately for comment.