In a blow to the two biggest networks in payments, the $5.6 billion antitrust class-action settlement, in which more than 12 million retailers have accused Visa and Mastercard of improperly fixing credit and debit card interchange fees, has been upheld by a Federal court.
$5.6 billion interchange settlement upheld
The 2nd US Circuit Court of Appeals rejected claims that a class action should not have been certified because of confusion over who deserved compensation, and that the $523 million of legal fees awarded to the retailers’ lawyers was too high.
Among the objectors were a group of petrol station operators for oil companies such as Chevron and Shell.
The operators and the companies both claimed to have been injured after accepting Visa and Mastercard for petrol sales.
Circuit Judge Dennis Jacobs said that although their dispute may need to be resolved in court, it was “no reason” to delay pay-outs to other class members.
The settlement resolved claims that Visa and Mastercard overcharged retailers on interchange fees when shoppers used credit or debit cards, and barred retailers from directing customers toward cheaper means of payment.
Settling retailers would be barred from bringing further claims from within the 15-year class period, and for five more years after the settlement became final, court papers show.
The settlement had won approval from US District Judge Margo Brodie in Brooklyn in Dec. 2019, three-and-a-half years after the appeals court voided a $7.25 billion accord approved by a different judge because it short-changed some retailers.
Nearly 8,000 merchants opted out, bringing the settlement down to $5.7 billion.
While upholding the latest settlement, Jacobs said the outcome was “so remarkable as to prompt disquiet.”
He said this was in part because the retailers’ lawyers had billed for 630,000 hours of work, or about 72 calendar years, and could collect more if Visa and Mastercard’s anticompetitive behaviour resumed and more litigation ensued.
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