Visa Inc. and MasterCard Inc. have until Oct. 19 to formally request approval of a more than $6 billion settlement to a lawsuit over interchange fees, according to a filing unsealed in Brooklyn, New York, federal court.
U.S. Magistrate Judge James Orenstein ordered that the agenda be made public following a hearing on the status of the case, which was the first court appearance since the settlement was unveiled last month.
The deal, which would settle allegations of interchange fee price-fixing, promises to provide merchants with cash payments as well as a temporary reduction in interchange fees and the potential for surcharges to cover future interchange costs.
Opposition to the accord has grown over the past few weeks, with groups including the National Cooperative Grocers Association and retail giants Wal-Mart Stores Inc. and Target Corp. issuing statements saying the settlement doesn't do enough for merchants.
"We are making progress and getting the underlying documents drafted," K. Craig Wildfang, an attorney for the plaintiffs, said in court regarding a motion for approval of the settlement. "We are going as fast as we can. Not as fast as we would like."
The National Cooperative Grocers Association and the National Association of Convenience Stores plan to fight the settlement in court, Jeffrey Shinder, a lawyer for the groups, said in a phone interview.
"There are serious issues with the settlement," he said. "The trade association named plaintiffs who came out against it, all of the members of their boards — flesh and blood merchants — voted against it."
The convenience store group, which issued its statement within minutes of the settlement's disclosure on July 13, said the deal amounts to only two months' worth of roughly $50 billion in swipe fees collected annually by payment networks. The deal also doesn't prevent Visa or MasterCard from raising fees in the future, the group said. Other measures under the deal would only be allowed under strict oversight of Visa and MasterCard, making them "unworkable" for merchants, the group said.
Target said in a statement that the proposed settlement would "perpetuate a broken system." Wal-Mart said in a statement that "we encourage all merchants to put consumers first and reject the settlement."
Visa Chairman and CEO Joseph Saunders told investors in a conference call on July 25 that he expected a federal judge to grant preliminary approval to the settlement in the fall. The court must also grant final approval to the deal before it can be implemented.
The accord followed roughly a roughly a seven-year legal battle, according to lawyers for the plaintiffs.
"This settlement agreement is the result of seven years of negotiation which makes us confident that the court will agree that this is fair to all parties," Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which favors the deal, said in an e-mail statement.
"The recent statements that we've heard from a handful of retailers are nothing new and have already been considered during the course of this long negotiation," she said.
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).