Visa and Mastercard agreed to pay as much as $6.2 billion to end a long-running price-fixing case brought by merchants over card fees, the largest-ever class action settlement of an antitrust case.
The two card companies will pay between $5.54 billion and $6.24 billion to settle the claims, according to a filing Tuesday. Visa and Mastercard had previously set aside $5.3 billion with the court to settle the claims. Earlier this year, as the two sides drew closer to an agreement, they put aside an additional $900 million to help cover the settlement amount.
“After years of thoughtful negotiation, we are pleased to be able to reach this agreement and move forward in our partnership with merchants to provide consumers convenient, reliable, secure ways to pay,” Kelly Mahon Tullier, Visa’s general counsel, said in a statement.
As part of the payment, Visa and Mastercard will use shares owned by banks including JPMorgan Chase & Co., Citigroup and Bank of America. The lawsuit is one of many flashpoints in the battle between retailers and financial firms over the $90 billion that U.S. Merchants spend every year on swipe fees.
The dispute began in 2005, when Visa (V) and Mastercard (MA) were still owned by banks. Merchants had accused them of violating antitrust laws by illegally inflating swipe fees, or interchange, that merchants pay on every purchase transaction and which banks use to fund consumers’ credit-card rewards. The two payments networks have since gone public — Mastercard in 2006, and Visa in 2008 — and their shares have soared.
This isn’t the first time a settlement has been reached in the case. In 2013, the parties struck a then-record $5.7 billion deal that was approved by U.S. District Judge John Gleeson, only to have a federal appeals court reject it three years later, ruling that a provision that barred merchants from suing over fees was unfair. The court also said that lawyers who represented retailers nationwide didn’t do enough to protect their interests.
Gleeson stepped down from the bench in 2016 and the case is now assigned to Judge Margo K. Brodie.
After tossing out the earlier settlement, the court divided the merchants’ claims into two separate classes, one that focused on monetary damages and the other on making changes to Visa and Mastercard’s business practices. Tuesday’s settlement is for the class focused on monetary damages.
The earlier settlement was for as much as $7.25 billion, but the value was reduced after many of the country’s largest retailers, including Starbucks and Lowe’s Cos., opted out. Those merchants will have to decide whether to do so again.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).