In a complaint filed last Thursday in the Eastern District of New York, Verizon fired another salvo in the long-running price-fixing dispute between merchants and credit card providers Visa and Mastercard. The suit alleges that Visa and Mastercard have colluded to fix the price of interchange fees, which are charged to the merchant whenever a transaction using a Visa or Mastercard payment card is made.
The claims run parallel to a massive lawsuit from 2005, which alleges that the member banks which comprised Visa and Mastercard conspired to fix prices. That case, also in the Eastern District of New York, reached a multi-billion dollar settlement in 2012.
The settlement remains in flux today. It is currently under judicial review, with a status conference scheduled for next month. Thousands of plaintiffs opted out of the settlement, while others contested its fairness. Verizon, nor its parent company Cellco, appear on the docket for that case as of publication.
Verizon’s suit against Visa and Mastercard alleges that Visa and Mastercard, and the member banks that comprised the customer base of those companies, conspired to inflate the interchange fees that affect every transaction made with a card. The defendants allegedly maintained supracompetitve pricing, in part, through rules and policies that prevent competition. These include prohibitions that prevent merchants from recouping the fees from customers or implementing minimum purchase requirements to use a credit card. Additionally, Verizon also alleges that the uniform schedule of Default Interchange Fees used by the defendants are illegal.
Verizon also notes that Mastercard and Visa restructured as part of an initial public offering in 2006 “in order to avoid antitrust scrutiny.” Prior to their restructurings, Visa and Mastercard operated as a consortium or cooperative of the member banks rather than a publicly-traded company. The restructurings occurred after the 2005 lawsuit was filed.
The Verizon case has not yet been assigned to a judge. The plaintiffs are represented by Lowenstein & Sandler.