Justice Department Litigates Against the Major Card Brands
The U.S. Justice Department announced today that it has filed an antitrust case against the three major card brands but that Visa and MasterCard have already settled with the government.
The Justice Department's complaint is that American Express, Visa and MasterCard have put rules in place that prevent merchants from offering consumer discounts, rewards and information about card costs to induce them to choose another payment method.
"With today's lawsuit we are sending a clear message: We will not tolerate anti-competitive practices," said U.S. Attorney General Eric Holder. "We want to put more money in consumers' pockets, and by eliminating credit card companies' anti-competitive rules, we will accomplish that."
Attorneys general from Connecticut, Iowa, Maryland, Michigan, Missouri, Ohio and Texas also joined in the suit.
But Holder also reported that Visa and MasterCard have come to a tentative agreement on the case.
The agreement, if approved by the court, would require the two companies to allow merchants to offer discounts, incentives and information to consumers to encourage the use of payment methods that are less costly.
"As we referenced in our previous public filings, our constructive conversations with the Department of Justice have resulted in an amicable resolution of the Department's broad-based investigation that will lead to Visa making a reasonable modification to our discounting rule," said Josh Floum, general counsel, Visa Inc.
"Visa always has allowed merchants to discount for cash and PIN-debit, and extending the ability to discount by network brand is a reasonable accommodation. The settlement will not impact our ability to continue growing our business by offering innovative payments products that consumers and merchants value above any others. The settlement also gives U.S. merchants new tools to manage their acceptance costs while benefiting from the tremendous value electronic payments deliver."