Feds sue MasterCard, Visa, American Express

ard companies for anti-competitive practices and reached a proposed settlement with two of them, MasterCard and Visa.

"We want to put more money in consumers' pockets, and by eliminating credit-card companies' anti-competitive rules, we will accomplish exactly that," Attorney General Eric Holder said at an afternoon news conference. "The companies put merchants and their customers in a no-win situation" and "consumers are being held hostage."

In papers filed in federal court in Brooklyn, the department and several state attorneys general sued American Express, MasterCard and Visa, saying they were attempting to insulate themselves from competition.

At the same time, the Justice Department filed a settlement that it reached with Visa and MasterCard. Under the settlement, Visa and MasterCard agree not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card. Visa and MasterCard also must allow merchants to express preferences for the use of a low-cost card within a network or other form of payment.

The lawsuit says the card companies are impeding merchants from promoting the use of competing credit or charge cards with lower acceptance fees. Each time consumers use a credit card to make a purchase, the merchant must pay a fee. Such fees brought in $35 billion last year to the three credit-card companies and their affiliated banks.

"We're partway there" with the proposed agreement with Visa and MasterCard, said Assistant Attorney General Christine Varney, head of the department's antitrust division. "We remain open" to seek a settlement with American Express, she added.

by Associated Press Oct. 5, 2010 12:00 AM


Feds sue MasterCard, Visa, American Express