(Phoenix, Ariz. - Dec. 20, 2010) Arizona Attorney General Terry Goddard today joined an antitrust settlement with 17 other states, the United States Department of Justice, MasterCard International Incorporated and Visa, Inc. intended to restore competition among credit card networks.
Arizona joins a consent decree filed Oct. 4 in federal court in New York. Under the terms of the decree, Visa and MasterCard have agreed to amend their rules to now allow merchants to offer discounts, incentives and information to consumers to encourage them to use less costly methods of payment, including cash, check, debit, or lower cost credit cards. Visa and MasterCard further agreed that they will not promulgate or enforce any existing rule that infringes on merchants’ ability to promote the use of less costly forms of payment or to inform consumers about the costs associated with credit card use.
According to the complaint filed simultaneously with the settlement, which also names as defendants American Express Company and American Express Travel Related Services Company, Inc. (collectively, “American Express”), merchants pay an acceptance fee every time they accept payment with one of the defendants’ credit cards. Last year, Visa, MasterCard, American Express and their affiliated banks collected approximately $35 billion in acceptance fees from merchants, who passed those fees onto consumers in the form of higher prices for goods and services.
Merchants pay higher acceptance fees for accepting rewards cards, which reward users with airline miles or cash rebates, among other things. Visa’s, MasterCard’s and American Express’ current merchant rules prohibit merchants from refusing to accept such cards or encouraging consumers to use credit cards with lower acceptance fees.
Litigation against American Express is ongoing since it did not join the settlement.
The settlement with Visa and MasterCard is subject to the Tunney Act, which provides for a period of at least 60 days for public comment before the court can approve the settlement.
The other settling states include Connecticut, Hawaii, Idaho, Illinois, Iowa, Maryland, Michigan, Missouri, Montana, Nebraska, New Hampshire, Ohio, Rhode Island, Tennessee, Texas, Utah and Vermont.
Copies of the complaint and the settlement are attached. For more information, contact Janey Pearl at (602) 542-8019.