Justice Department Seeks OK for Pact With Visa, MasterCard

By DAVID BENOIT

The Justice Department on Tuesday asked a federal court in New York to approve a settlement it reached last year with Visa Inc. and MasterCard Inc. over an antitrust suit that alleged the card industry was illegally forcing consumers to use certain cards.
Visa and MasterCard had settled with the Justice Department before the allegations were made public last October, agreeing to end restrictions on merchants and allowing merchants to offer discounts, rebates or other incentives to get customers to use cards with lower merchant fees, such as "plain-vanilla" cards with no rewards or points programs.
The Justice Department slapped American Express Co. with a civil antitrust suit in October after the company refused to join the industrywide agreement. AmEx is fighting the case, contending the settlement potentially hands Visa and MasterCard more market power because it would permit merchants to direct away customers from AmEx, which typically charges merchants higher fees.
Certain cards carry higher interchange fees for retailers—that is, the amount the card issuers charge per swipe.
On Tuesday, the Justice Department said in a filing in federal court in Brooklyn, N.Y., that it had received six public comments on the proposed settlement, but that none were enough to derail the settlement.
However, the Justice Department did note that some important points were raised by the merchant groups that did submit comments. For instance, the Justice Department described as "important" a comment from the Retail Industry Leaders Association expressing concern that merchants can't distinguish which cards carry higher interchange fees on sight.
The Justice Department said that it has worked with Visa and MasterCard and that they "will soon offer such an electronic means to differentiate among card types."
Still, the settlement left open questions and doubts for some merchants, including Retail Industry Leaders Association.
"We applaud the Department of Justice for attempting to address the major anticompetitive practices regarding steering and discounting; however, serious doubts remain as to whether the settlement offers merchants the tools they need to take action," said Katherine Lugar, executive vice president for public affairs at the group. "We expect Visa and MasterCard will continue to tie merchant's hands by not providing the information needed to give consumers the credit card discounts and other valuable incentives as intended by this remedy."
—Aparajita Saha-Bubna contributed to this article.