DALLAS (8/16/13)--About 216 merchants Tuesday filed an antitrust lawsuit in a Marshall, Texas, U.S. District Court against Visa and MasterCard, claiming the card companies' policies force them to pay hundreds of millions of dollars in excess interchange fees.
The suit claims that the two card companies have adopted nearly identical membership rules that prevent financial institution-issuers of credit and debit cards from competing for merchant acceptance of the cards. It was filed Tuesday in the U.S. District Court for the Eastern District of Texas. The lead plaintiff is Delta Air Lines. Most of the plaintiffs are in the travel and energy industry, and include several airlines, hotels such as La Quintas Inns and Red Roof Inns, and travel companies such as Orbitz Worldwide and Travelocity, as well as Radio Shack and Pier 1 Imports.
The suit alleges the card companies violated the Sherman Act. The plaintiffs seek unspecified damages, along with punitive damages and attorneys' fees.
"Because Visa and MasterCard have as their members nearly all card issuers in the U.S., and because those card issuers have agreed to rules that preclude them from independently competing for merchant acceptance, Visa and MasterCard and their members have obtained and maintained market power in the market for merchant acceptance of debit cards in the U.S.," said the complaint.
"The exercise of this market power has led merchants to pay excessive interchange fees. In this manner, Visa and MasterCard have unlawfully restrained competition in these markets," the complaint continued.
Saying that interchange fees are their biggest operating expense, the merchants alleged that maximum debit interchange fees enacted by the Federal Reserve as a result of the Durbin Amendment have not eliminated the anticompetitive effects of the card companies' setting default fees.
A U.S. District Court in Washington, D.C., ordered the Fed to redo its rule that implemented the interchange amendment that capped debit card interchange fees (News Now Aug. 13).
In May, Visa and MasterCard filed a lawsuit against 11 retail organizations that opted out of a $7.25 billion interchange settlement proposal in an antitrust lawsuit against the companies (News Now May 29).