The Justice Department has filed suit against the three largest U.S. credit card companies for anticompetitive practices. A proposed settlement has already been reached with MasterCard and Visa, two of the Defendants. Attorney General Eric Holder, discussing the settlement, told a news conference:
We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rule, we will accomplish exactly that. The companies put merchants and their customers in a no-win situation and consumers are being held hostage.
The Justice Department and various state Attorneys General sued all three companies in federal court in Brooklyn. It was alleged the Defendants were attempting to insulate themselves from competition. Under the proposed settlement, Visa and MasterCard agreed not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card.
It’s alleged in the lawsuit that the card companies are impeding merchants from promoting the use of competing credit or charge cards with lower acceptance fees. Each time consumers use a credit card to make a purchase, the merchant must pay a fee. Such fees brought in $35 billion last year to the three credit card companies and their affiliated banks. The settlement agreement with Visa and MasterCard are most significant, leaving only one Defendant in the lawsuit.
Source: Associated Press
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