Walmart and other major retailers have formally objected to a proposed antitrust settlement between Visa and Mastercard, urging a federal judge in Brooklyn to reject the agreement on the grounds that it fails to provide meaningful relief to merchants while allowing the card networks to continue charging excessive transaction fees. (Reuters)
The objections were filed in the long-running In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, pending before the U.S. District Court for the Eastern District of New York. The proposed settlement, announced in November, seeks to resolve nearly two decades of litigation after a federal judge rejected an earlier $30 billion settlement last year.
Under the new agreement, Visa and Mastercard would reduce the so-called “swipe fees” charged to merchants on retail credit card transactions by 0.1 percentage point for a period of five years. In exchange, merchants would be required to release antitrust claims against the card networks for an eight-year period.
In its filing, Walmart argued that the settlement was negotiated by a small group of local merchants and provides “no meaningful relief” for large national retailers. The company contended that the agreement forces merchants to relinquish valuable antitrust claims without securing the structural reforms they have sought for decades. In particular, Walmart criticized the settlement for leaving intact the “honor-all-cards” rules, which require merchants that accept any Visa or Mastercard credit card to accept all cards issued under those brands, regardless of issuing bank or fee level.
Walmart stated that the settlement would compel the company to give up its legal rights while failing to dismantle the practices at the core of the alleged anticompetitive conduct. Visa and Mastercard did not admit wrongdoing in agreeing to the settlement. Mastercard said it believes the agreement represents the best available resolution for all parties and expressed its desire to bring the litigation to a close. Visa reiterated its position that the settlement would offer merchants of all sizes meaningful relief, as well as greater flexibility and options in how they accept card payments.
Retail trade associations have also voiced strong opposition. In a separate filing, the National Retail Federation and the Retail Industry Leaders Association warned U.S. District Judge Brian Cogan that the proposed reforms were largely illusory and that the settlement would result in what they described as “staggering” legal fees of approximately $206 million for plaintiffs’ attorneys. The associations further criticized the process, noting that five small businesses negotiated settlement terms on behalf of an estimated 20 million merchants, despite organizations representing roughly $2.7 trillion in annual retail sales being excluded from negotiations.
Additional objections were submitted by merchant plaintiffs involved in separate litigation against Visa concerning debit-card transactions. These plaintiffs argued that the proposed settlement could undermine their ongoing case and potentially interfere with broader enforcement efforts, including actions brought by the U.S. Department of Justice and private consumer lawsuits alleging monopolization of debit-card markets.
The court will now assess whether the proposed settlement satisfies the requirements of fairness, adequacy, and reasonableness under U.S. class action rules. The outcome is likely to have significant implications for merchant payment costs, competition in card networks, and the future enforcement of antitrust rules in the U.S. payments industry.