A US federal judge on Friday approved an estimated US$5.7 billion class action settlement between merchants and Visa and MasterCard over credit card fees, despite objections from thousands of retailers who complained it was inadequate.
The settlement is believed to be the largest in a US antitrust class action.
Merchants first sued Visa and MasterCard in 2005, accusing the two companies of fixing the fees charged to merchants each time their customers used their credit or debit cards. They were accused also of preventing merchants from steering customers to cheaper forms of payments.
US District Judge John Gleeson of Brooklyn, New York, approved the settlement in a written order. He also dismissed some of the objections made by merchants opposed to the deal as hyperbole.
At a fairness hearing in September, he said that one objector cast Visa and MasterCard as Nazis.
“I conclude that the proposed settlement secures both a significant damage award and meaningful injunctive relief for a class of merchants that would face a substantial likelihood of securing no relief at all if this case were to proceed,” Gleeson wrote.
The value of the settlement reached last year decreased to US$5.7 billion from about US$7.2 billion after thousands of merchants opted out of the deal, said Craig Wildfang, an attorney for the plaintiffs.
Mallory Duncan, general counsel for the US National Retail Federation, which opposed the settlement, said in a statement that his organization was reviewing Gleeson’s ruling and expected to file an appeal.
“The settlement permanently ties the hands of thousands of businesses who wanted nothing to do with this misguided case and a decision to approve it violates established law and common sense,” he added.
Approval of the current settlement has been opposed by many of the largest players in the retail industry. About 8,000 merchants, accounting for about 25 percent of the transactional volume at issue in the case, opted out of the settlement. Among those opting out were the largest retailers in the US, including Wal-Mart Stores, Amazon.com and Target Corp.