In 2012, after almost eight years of litigation, the parties announced that they had agreed to the largest class action settlement in US antitrust history. Judge Gleeson took an unusual approach to his supervision of the case. Having previously overseen the 2003 settlement of an earlier antitrust class action against Visa and MasterCard related to the acceptance of debit cards, Judge Gleeson clearly believed that there should be a final resolution of merchants’ grievances. While Judge Gleeson indicated that default interchange, and Honor all Cards/Issuers and related matters should be resolved by legislation, in the face of congressional inaction, the litigation was poised to put these issues to bed, once and for all.
The agreement that emerged was unusual in several ways; perhaps most importantly in that it divided the plaintiffs into two sub-classes. The first was a relatively conventional 23(b)(3) class that would receive relief of $7.25 billion and included merchants who accepted Visa and/or MasterCard from January 1, 2004, to November 28, 2012. The second was a Rule 23(b)(2) class that covered all merchants that …show more content…
First, because of rules imposed by American Express, any merchant who accepted that brand in addition to Visa and Mastercard products was effectively prohibited from applying surcharges. Second, several states – most notably California, New York, Texas, and Florida – had laws banning surcharging. Combined, it was argued, these factors limited the change in surcharge rules to a minority of transactions and might not move the needle in the card acceptance market. Additionally, since the rule changes would phase out in 2012 they would provide no value to merchants who start accepting plastic afterward, even though those merchants would be unable to challenge the rules because of the mandatory
The agreement that emerged was unusual in several ways; perhaps most importantly in that it divided the plaintiffs into two sub-classes. The first was a relatively conventional 23(b)(3) class that would receive relief of $7.25 billion and included merchants who accepted Visa and/or MasterCard from January 1, 2004, to November 28, 2012. The second was a Rule 23(b)(2) class that covered all merchants that …show more content…
First, because of rules imposed by American Express, any merchant who accepted that brand in addition to Visa and Mastercard products was effectively prohibited from applying surcharges. Second, several states – most notably California, New York, Texas, and Florida – had laws banning surcharging. Combined, it was argued, these factors limited the change in surcharge rules to a minority of transactions and might not move the needle in the card acceptance market. Additionally, since the rule changes would phase out in 2012 they would provide no value to merchants who start accepting plastic afterward, even though those merchants would be unable to challenge the rules because of the mandatory