Wal-Mart Stores Inc. sued Visa (V:US) Inc. for allegedly conspiring with banks to fix transaction fees, the latest salvo of a multiyear legal fight between retailers and card issuers.
The world’s biggest retailer seeks at least $5 billion in damages for what it claims are violations of federal antitrust laws that could triple that sum.
Wal-Mart, one of dozens of large merchants that dropped out of a nationwide, multibillion dollar antitrust settlement with Visa and MasterCard Inc. (MA:US) to pursue their own lawsuits, filed its complaint in federal court in Fayetteville, Arkansas, on March 25.
“Visa’s monopoly power has enabled it to dictate price and inhibit competition,” Wal-Mart said in its complaint.
The settlement Wal-Mart withdrew from, initially valued at $7.25 billion, was approved by a Brooklyn, New York, federal judge in December. It’s now worth about $5.7 billion after reductions for the merchants that bowed out.
Visa sued the Bentonville, Arkansas-based retailer in June to try to stop it from bringing its own case, saying in a complaint filed in Brooklyn that it sought to prevent “the continuation of endless, wasteful litigation between the parties.”
Paul Cohen, a spokesman for Visa, declined to comment on the Wal-Mart complaint.
Wal-Mart claims the card company’s conduct caused it to suffer “enormous damage” from January 2004 to late November 2012. No banks are named as defendants in the case.
Wal-Mart objects to the requirement that retailers who want to accept any payments via Visa honor all issuers’ Visa-branded cards.
“There is no competition because merchants are prevented from realizing the price-reducing benefits that would result if issuers competed” over the fees they charged retailers who agreed to accept their cards for payment, according to Wal-Mart’s complaint.
The settlement of the case in Brooklyn followed years of tension over interchange fees that amount to as much as 2 percent of a sale paid for with a credit card. Retailers and trade associations opposed to the accord contended it didn’t pay enough in damages and unfairly blocked all U.S. merchants from suing over fees in the future.
Major League Baseball’s Minnesota Twins also dropped out of the settlement with Visa and MasterCard.
The team and other Minnesota businesses filed their own complaint against the credit card firms in February, claiming they “insulated themselves and their members from competition that would drive down the bloated prices plaintiffs have paid to accept Visa and MasterCard payment cards.”
Fees charged by MasterCard and Visa are “far in excess” of associated network and bank costs for processing the underlying transactions, the team alleged.
The U.S. Court of Appeals for the District of Columbia on March 21 rejected a challenge by Wal-Mart, Target Corp. and other retailers to federal rules governing how much banks can collect for debit card transactions, leaving in place an October 2011 rule capping the average swipe fee at about 24 cents per transaction.
While banks had objected to the limit, retailers contended that if the Federal Reserve, which set the rate, had followed the law the fees they paid on each swipe of a customer’s card would have been cut more and network competition enhanced.
The case is Wal-Mart Stores Inc. v. Visa USA Inc., 14cv5101, U.S. District Court, Western District of Arkansas (Fayetteville).
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