Hagens Berman recovered a settlement that the court valued at between $25-87 billion to resolve claims alleging Visa and Mastercard engaged in an anticompetitive scheme to monopolize the debit card services market and charge merchants artificially inflated interchange fees. It was the largest antitrust settlement in U.S. history at the time.
Hagens Berman filed a lawsuit against Visa and Mastercard in October 1996 on behalf of a nationwide class of merchants, alleging the companies illegally tied merchant acceptance of their debit card services, Visa Check and MasterMoney, to merchant acceptance of their credit card services via a so-called “Honor All Cards rule.” The lawsuit accused defendants of using these arrangements, along with other anticompetitive conduct, to monopolize the debit card services market. Merchants claimed the alleged anticompetitive conduct resulted in their paying higher interchange fees to accept Visa and Mastercard card transactions.
ABOUT THE SETTLEMENTS
Settlements with Visa and Mastercard secured categories of relief that court decisions valued at as much as $25-87 billion, as the companies agreed to unbundle merchant acceptance of Visa and Mastercard point-of-sale debit devices and merchant acceptance of any other Visa and Mastercard products. This injunctive relief meant the companies could no longer require merchants also accept Visa and Mastercard point-of-sale debit devices, and vice versa, as a condition of accepting other Visa and Mastercard products. The companies were also required to reduce interchange rates under the terms of the settlement, and prohibited from enacting any rules that might prevent merchants from encouraging consumers to use alternate forms of payment.
The merchants entered into a memorandum of understanding regarding the proposed settlements with Visa and Mastercard.
The U.S. Supreme Court denied Visa and Mastercard’s motion for summary judgment and granted in part and denied in part the merchants’ motion for summary judgment and denied Mastercard’s motion for severance or a separate trial.
Later in April, the merchants entered into a memorandum of understanding regarding proposed settlement agreements with Visa and Mastercard.