NEW YORK (Reuters) - Lawyers for U.S. retailers said on Thursday they expect to submit a proposed $7.2 billion antitrust settlement with Visa Inc and Mastercard Inc for court approval within the next several months, despite opposition to the pact from some large merchants.
The plaintiffs do not expect to make any changes to the proposed settlement when it is submitted for preliminary approval by an October 19 deadline, said co-lead counsel Craig Wildfang following a hearing in Brooklyn federal court.
“We’re going as fast as we can - not as fast as we’d like, but we’re making progress,” he told U.S. Magistrate Judge James Orenstein during the hearing, referring to supporting documents for the settlement.
The settlement would be the largest antitrust settlement in U.S. history. It would resolve a seven-year-old lawsuit accusing the two credit card companies of conspiring with major banks to artificially inflate interchange fees, the amount paid to process electronic transactions involving credit and debit cards.
The settlement requires approval by U.S. District Judge John Gleeson, who oversaw retailers’ previous $3 billion swipe-fee settlement with Visa and Mastercard in 2003.
As part of the new pact, the credit card companies have offered to pay $6 billion and temporarily reduce interchange fees, also known as swipe fees, to save stores approximately $1.2 billion over an eight-month period, according to court papers.
Despite support from Visa and Mastercard, which would pay the bulk of the $6 billion, the settlement has received a frosty reception from several trade associations and some big retailers, including Wal-Mart Stores Inc and Target Corp.
The National Association of Convenience Stores publicly rejected the settlement, and trade groups representing grocers and pharmacies, among others, have since voiced objections.
The settlement would allow stores to charge customers extra if they pay with credit cards, although that ability would be limited by state law and stores’ agreements with other card companies, such as American Express Co, according to court papers.
The settlement would also give merchants the right to negotiate collectively over swipe fees, and includes broad releases shielding Visa and Mastercard from future litigation over similar swipe-fee issues, court papers showed.
The objectors have said the settlement does not offer meaningful reforms to swipe-fee structures. Some merchants have said they either will not or cannot impose credit card surcharges on customer payments, and others have objected to the releases barring future swipe fee suits.
If enough stores opt out of the proposal — representing at least 25 percent of annual U.S. retail volume collectively —Visa and Mastercard have the option to withdraw from the deal, according to court papers.
Several of the main objectors are being represented by lawyer Jeffrey Shinder. His law firm, Constantine Cannon, served as lead counsel on the 2003 settlement with Visa and Mastercard, although Constantine Cannon is not among the three firms designated as lead counsel for the current litigation.
Objections will likely be taken up with the court after the settlement is formally submitted for approval, according to Shinder.
“There are fundamental problems with this deal that the court absolutely needs to address before it gives its preliminary approval,” he said after the hearing.
Wal-Mart and Target did not immediately have additional comment beyond their earlier concerns about the settlement, according to spokespeople for both companies.
The case is In re Payment Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, No. 05-1720.
Reporting by Jessica Dye; Editing by Martha Graybow, Steve Orlofsky