Holiday bonus: U.S. retailers receive $1.1 billion in landmark antitrust case
New York City Merchants across the nation will receive checks this week for approximately $1.1 billion as part of a landmark antitrust settlement over Visa and MasterCard-branded signature debit cards.
The payments will be mailed starting Tuesday to approximately 634,000 merchants nationwide. With retail operating margins for most retailers averaging less than 5%, the $1.1 billion payment is the equivalent to a $22 billion increase in merchants’ overall holiday revenue.
“The timing of these checks couldn’t be better,” said Tracy Mullin, president and CEO, National Retail Federation. “They come during a difficult holiday season and will help retailers position themselves to participate in the economic recovery that lies ahead.”
NRF and RILA were class representatives in the lawsuit.
The payment represents the final large-scale disbursement of the $3.4 billion settlement in In re Visa Check/MasterMoney Antitrust Litigation. The settlement with Visa and MasterCard was negotiated in 2003 by the legal firm of Constantine Cannon (formerly Constantine & Partners) after seven years of litigation.
Visa and MasterCard were allowed to pay the damages on an installment plan scheduled to run through the end of 2012, and have paid about $1.85 billion so far. Most of the funds received have been distributed to merchants represented in the suit, but retailers had expected to wait almost three more years to receive the remainder. Rather than continue to make yearly installments, however, Visa and MasterCard agreed this fall to pay $1.1 billion all at once. The agreement means retailers will receive slightly less than originally agreed on, but the money will come in time to help with the current economic situation.
Jeffrey I. Shinder, managing partner of the New York office of Constantine Cannon, said: “This is likely the largest single payment to businesses in a class action in history, and it comes at a time when banks have all but stopped lending to the smaller retailers that make up the backbone of the class.”
More than 90% of the merchants receiving checks are retailers. Other members of the class include cash-strapped educational institutions, charitable organizations and state government entities.
The Visa Check/MasterMoney Antitrust Litigation is still the largest antitrust settlement in U.S. history. In addition to the $3 billion in damages, Visa and MasterCard agreed to no longer require merchants who accept their credit cards to accept their debit cards. Merchants were also allowed to choose whether to accept both signature and PIN debit, one or the other, or no debit cards at all.