In 1998 the United States government’s Department of Justice initiated an antitrust lawsuit against Visa and Mastercard for allegedly restraining competition in the credit card industry. The lawsuit alleged that Visa and Mastercard had a policy of preventing their member banks from issuing cards by their competitors, namely American Express and Discover. Such a policy would reduce the ability of American Express and Discover to compete, which is a violation of federal antitrust laws.
Visa and Mastercard issue approximately 75% of credit cards in the United States. There are allegations that Visa charges retailers a high rate each time a card is used, and that retailers pass this cost along to consumers. Lawyers for Discover said that retailers and consumers could save money if the court rules against Visa and Mastercard.
Visa and Mastercard rejected the arguments of the government and their competitors. The credit card companies claim that their policies actually foster competition.
The United States District Court ruled for the government and found that Visa and Mastercard had violated federal antitrust laws. In September of 2003 the U.S. Court of Appeals upheld the lower court’s decision.
Several retail firms brought a class action against Visa and Mastercard for their alleged unfair business practices. In December of 2003 a judge approved a settlement of over $3 billion dollars in this action. If you are a retailer and believe you are a member of this class, contact an experienced business attorney to determine if you are eligible for any benefits from the settlement.