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Another Step Closer to Final Approval of the Interchange Settlement:
Definitive Settlement Agreement and Motion for Preliminary Approval Filed Today
October 19, 2012
WASHINGTON—(BUSINESS WIRE)—Today, class counsel, on behalf of numerous retailers who are proposed class representatives, filed the Definitive Settlement Agreement, as well as a motion to request that the Honorable Judge Gleeson of the U.S. District Court for the Eastern District of New York preliminarily approve a landmark settlement of a lawsuit over merchant interchange fees. The settlement was originally announced on July 13th after over seven years of litigation, mediation and negotiation between retailers, payment networks and nine major card issuers. The parties involved have now come together to take the next step in the process in an effort to settle this dispute once and for all.
"This settlement is the culmination of seven years of litigation, two full years of mediation, and, with the consent of all parties, the direct oversight of Judge Gleeson," said Robert Stolebarger, a Partner at Bryan Cave LLP and antitrust counsel for the Electronic Payments Coalition. "As with any settlement, both sides had to give a little or a lot here and there to reach a compromise – and as a result, no one is entirely happy. But in the end, in my view, this settlement represents the very best and most realistic outcome possible for all involved."
In a brief filed with the Court by the proposed retailer class representatives, it was explained why the settlement should receive preliminary approval from the Court. Some of the key points that the retailers made to support the settlement include:
ALL parties were intimately involved in the process. All of the parties – including groups like National Grocers Association, National Restaurant Association, and other original named plaintiffs – have been present in this expansive negotiation moderated by two mediators, with direct oversight by Judge Gleeson. These proposals were ultimately embraced, even by those objecting.
—Class Counsel's Memorandum in Support of Plaintiffs' Motion for Class Settlement Preliminary Approval, p. 9
Passes the "fair, reasonable and adequate” test. Given the "complexity, expense and likely duration of the litigation,” and the "reasonableness of the settlement fund” – the largest private antitrust settlement in history – the settlement is well within the possible range of approval as "fair, reasonable and adequate” – the standard for preliminary approval.
—Class Counsel's Memo, p. 15
Benefits all merchants. "These reforms introduce transparency at the point of sale, give merchants tools they need to exert downward pressure on the costs of payment card acceptance, and will benefit merchants and ultimately consumers. As a result of these reforms, merchants will be able to use discounts or surcharges to encourage customers to use a less expensive payment form or a different payment card brand or product. Merchants' new ability to steer transactions to lower cost payment methods or recover acceptance costs should incentivize Visa and MasterCard to moderate or lower their fees… Moreover, as described above, the settlement further provides for substantial injunctive relief which will exert competitive pressure on the Visa and MasterCard payment networks, thus fundamentally transforming the marketplace.”
—Class Counsel's Memo, p. 1 and p. 16
Members of the Electronic Payments Coalition remain highly confident that the Court will grant preliminary approval in or around January 2013, and ultimately final approval later that year.
"This represents the end of a long battle over fees between the retail and payment card industries," says Trish Wexler, spokeswoman for the Electronic Payments Coalition. "Sadly, for some retail lobbying groups, it is clear that nothing will ever be enough. But let's call this what it really is—politically motivated greed. These groups are simply hoping to create enough noise to attract Congress's attention and extract even more money from the Hill – money that they will never return to consumers. We remain confident that this truly is the end of the 'swipe fee' debate, and that preliminary approval and eventually final approval will be granted by the Court."
Recent noise in the press by some retailers who are "objecting" to the settlement has raised a number of questions as to the outcome of this settlement. Today, the Electronic Payments Coalition released an interview with Mr. Stolebarger where he addresses some of the most commonly asked questions.
To read more about the details of the settlement and the interchange issue, visit: www.ElectronicPaymentsCoalition.org/settlement.
About the Electronic Payments Coalition
The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe. EPC's goal is to protect the value, innovation, convenience and competition in today's growing electronic payments system. EPC educates policymakers, consumers and the media on the system's role in economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce.
Electronic Payments Coalition
Trish Wexler, 202-288-1238