|[November 09, 2012]
NRF Exploring Legal Options After Preliminary Approval of Swipe Fee Settlement
WASHINGTON --(Business Wire)--
The National Retail Federation today said it will explore all legal
options following a judge's preliminary approval of a proposed
class-action settlement of an antitrust lawsuit over the $30 billion a
year in credit card swipe fees charged by Visa and MasterCard (News - Alert).
"We respectfully disagree with the court's assessment of the proposed
settlement," NRF Senior Vice President and General Counsel Mallory
Duncan said. "We do not believe the proposal meets the legal tests
required to meet even preliminary approval. Retailers, their customers
and competition would suffer irreparable harm if this one-sided deal is
allowed to move forward. We will consult with our attorneys and act as
soon as possible to correct this injustice."
"This proposal benefits no one but lawyers and credit card companies,
and should not be forced on the retail industry or retailers'
customers," Duncan said. "It's a morass of legal flaws, and rather than
bringing about reform it would only entrench the anticompetitive
behavior of the card companies while putting them beyond the reach of
U.S. District Court Judge John Gleeson gave preliminary approval to the
proposed settlement following oral arguments today in Brooklyn, N.Y.
Among attorneys presenting their cases were lawyers for NRF, which last
week filed a brief in opposition to the settlement on behalf of itself,
17 retail and restaurant companies, and two other trade associations.
NRF is not a party to the lawsuit, but its members and the companies
named in the brief would be affected if the case is approved as a class
action. Arguments were also heard on bries filed by other opponents,
including retailers and associations who were parties to the suit but
who have rejected the proposal.
NRF argued in its brief that the settlement could not legally be
certified as a class action because it attempts to force a
one-size-fits-all solution onto a wildly diverse group of merchants. NRF
also argued that a provision barring all retailers - including those who
opt out of the settlement and even those who do not yet exist - from
filing future lawsuits over swipe fees is impermissibly broad under
federal law. In addition, the proposal allows retailers to reject
payments offered as compensation for past price-fixing but gives no
mechanism to opt out of flawed injunctive relief that would allow card
companies to continuing price fixing and fee increases in the future.
NRF opposes the settlement because it fails to reform the cartel-like
system where Visa and MasterCard set a rigid schedule of swipe fees that
all banks follow. It does nothing to disclose the hidden fees or
otherwise create transparency that would encourage competition that
would lead to lower fees. Merchant bargaining groups could be
recognized, but that is no change from current law. And while some
merchants would theoretically be given the right to surcharge as a
bargaining chip to hold down fees, the provision is subject to a wide
variety of card company restrictions, would be illegal in 10 states, and
ignores the goal of merchants to reduce prices paid by their customers.
As the world's largest retail trade association and the voice of retail
worldwide, NRF represents retailers of all types and sizes, including
chain restaurants and industry partners, from the United States and more
than 45 countries abroad. Retailers operate more than 3.6 million U.S.
establishments that support one in four U.S. jobs - 42 million working
Americans. Contributing $2.5 trillion to annual GDP, retail is a daily
barometer for the nation's economy. NRF's Retail
Means Jobs campaign emphasizes the economic importance of retail and
encourages policymakers to support a Jobs,
Innovation and Consumer Value Agenda aimed at boosting economic
growth and job creation. www.nrf.com
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