Visa Inc. sued Wal-Mart Stores Inc. in a bid to stop the world's largest retailer from filing a lawsuit to press price-fixing claims over merchant swipe fees.
Wal-Mart is among more than 7,000 retailers that dropped out of a multibillion-dollar settlement with Visa and MasterCard Inc. over the fees, which are charged to merchants when consumers pay with credit cards. In a complaint made public yesterday in Brooklyn, New York, federal court, Visa said it wants to prevent "the continuation of endless, wasteful litigation between the parties."
"Put simply, Visa seeks finality in its dispute with Wal-Mart," the Foster City, California-based credit card firm said in the complaint.
Visa, MasterCard and many of the country's largest banks are seeking a Brooklyn federal judge's final approval for a $7.25 billion settlement that would end an eight-year legal battle on behalf of millions of retailers over allegations that the card companies illegally fixed the fees. Retail trade associations and dozens of large retailers have objected to the settlement, claiming its terms are unfair, and thousands have dropped out.
Merchants that dropped out of the settlement have an option to pursue their own lawsuits over the fees. Visa said in its complaint that Wal-Mart "has made plain" that it will file a new lawsuit.
The retailers' opposition to the settlement follows years of tension over interchange fees, which amount to as much as 2 percent of every sale. Major retailers and trade associations contend the deal doesn't pay enough in damages and unfairly binds all U.S. merchants from suing over the fees in the future.
A hearing on final approval for the settlement is scheduled for September 12.
In November, U.S. District Judge John Gleeson in Brooklyn gave tentative approval, saying that while there were issues that would require "significant scrutiny," they weren't serious enough to derail a preliminary sign-off. He said he would appoint an outside expert to weigh in.
A spokesman for Bentonville, Arkansas-based Wal-Mart, Randy Hargrove, said the retailer is still evaluating whether to pursue its own suit.
"We are disappointed that Visa chose to file this unwarranted and unsupportable lawsuit in retaliation for our decision to opt out and object to an unfair settlement agreement," Hargrove said in a statement. "The proposed settlement would allow credit card companies and big banks to perpetuate a broken system that costs consumers billions of dollars each year."
Visa Chief Executive Office Charlie Scharf said the company's suit against Wal-Mart is intended to protect its interests.
"We remain committed to engaging with Wal-Mart and all merchants to resolve our differences amicably, while seeking new ways to work with our merchant partners and support our mutual growth objectives," Scharf said in a statement.
The cases are Visa U.S. A. Inc. v. Wal-Mart Stores Inc., 1:13-cv-3355, and In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).