(Reuters) - The National Retail Federation plans to go to court to fight a $7.2 billion settlement between some retailers and Visa Inc (V.N) and MasterCard Inc (MA.N) over transaction fees paid to the credit card companies.
The world’s largest retail trade organization said on Tuesday that the proposed settlement over “swipe fees” did not stop what it calls anti-competitive behavior by the credit card companies. The deal would also allow swipe fees to rise while barring further legal challenges, the NRF said.
“The proposal is a lose-lose-lose for merchants, consumers and competition,” NRF President Matthew Shay said in a statement. “NRF will take any and all steps necessary to oppose the settlement as it is currently proposed and will work toward real reform of the swipe fee system.”
The trade group said it was exploring what form of legal action to take.
The antitrust settlement, which requires the approval of U.S. District Judge John Gleeson in Brooklyn, New York, would be the largest in U.S. history. It would resolve a 7-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.
As part of the new pact, the credit card companies have offered to pay $6 billion and temporarily reduce interchange fees to save stores about $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 retail trade associations and some big retailers, including Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N).
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 (AXP.N), 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 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 Brad Dorfman in New York; Editing by Lisa Von Ahn