Visa Inc and MasterCard Inc’s proposed US$7.25 billion settlement of a merchant fee price-fixing case has won preliminary approval from a federal judge in Brooklyn, New York.
US District Judge John Gleeson made his ruling in court on Friday after considering arguments by retailers opposed to the deal. The judge’s decision allows plaintiffs to begin signing up more than 7 million retailers that might be eligible to participate. The settlement will be subject to a final approval at a later date.
“I don’t mean to suggest for a moment that there are not a number of issues that are going to require significant scrutiny,” Gleeson said. “I’m not persuaded that the deficiencies are the obvious deficiencies that ought to derail preliminary approval.”
Estimated to be the largest-ever anti-trust settlement, the deal would end a seven-year-long case alleging that the card companies conspired with major banks to fix interchange, or swipe, fees charged to merchants when customers pay with plastic. Retailers opposed to the deal claim it forces them to give up too many rights to sue over card company practices in the future.
After the hearing, representatives for Purchase, New York- based MasterCard and Foster City, California-based Visa said they were pleased with the decision.
“Our belief that the agreement will eventually receive final approval was strengthened today,” Visa general counsel Josh Floum said in a statement. “As we have said from the beginning, this settlement is a fair and reasonable compromise for all parties.”
Opponents of the deal said they are exploring legal options, including the possibility of an appeal.
“We respectfully disagree with the court’s assessment of the proposed settlement,” said Mallory Duncan, general counsel of settlement opponent the National Retail Federation, in a statement. “Retailers, their customers and competition would suffer irreparable harm if this one-sided deal is allowed to move forward.”