Target Objects to $7.25B Settlement with Credit Card Cos.
About a week after a local law firm said it reached a $7.25 billion settlement in a class-action lawsuit against Visa, MasterCard, and some of the nation’s largest banks, Target Corporation has joined the list of retailers who are objecting to the deal.
The proposed deal would settle a seven-year case in which merchants accused Visa and MasterCard of engaging in anti-competitive practices and of fixing prices when setting interchange fees—the fees retailers pay to banks to process the credit card transactions made by their customers.
Minneapolis-based Robins, Kaplan, Miller & Ciresi L.L.P., which represents a class of about 7 million retailers in the case, announced earlier this month that it had reached a deal with the banks and credit card companies, and the $7.25 billion settlement is believed to be the largest-ever settlement in a private, class-action antitrust case.
But not all retailers view the settlement as a clear victory. The National Association of Convenience Stores (NACS), one of the plaintiffs, was reportedly the first to reject the settlement, saying that it doesn’t go far enough.
Minneapolis-based Target joined the opposition, issuing the following statement on Friday: “Target believes the proposed interchange fee settlement is bad for both retailers and consumers. The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action, and offer no long-term relief for retailers or consumers. In addition, Target has no interest in surcharging guests who use credit and debit cards in order to allow Visa and MasterCard to continue charging unfair fees. We will continue to explore our options while working toward a solution that represents true reform.”
And Target isn’t alone in its opposition: More than two dozen merchants have joined the NACS in opposition to the proposal, according to a report by the Star Tribune.
The proposed settlement comprises $6.05 billion in damages, as well as about $1.2 billion in relief that retailers will experience as the credit card companies are required to temporarily reduce their interchange fees.
The settlement also requires the defendants to modify their practices. For example, Visa and MasterCard must negotiate with groups of retailers to establish interchange fees—a move that enables businesses to pressure them to reduce fees, according to Robins, Kaplan, Miller & Ciresi.
The 113-page settlement can be downloaded here.