Magazine article American Banker

Letters to the Editor: Wal-Mart Suit vs. Visa, MasterCard Is Far from Over

Magazine article American Banker

Letters to the Editor: Wal-Mart Suit vs. Visa, MasterCard Is Far from Over

Article excerpt

To the Editor:

With the publication of his Viewpoints article on the Wal-Mart lawsuit against MasterCard and Visa in the April 4 issue ("Banks Must Act to Prevent Disaster in Wal-Mart Case," page 8), Duncan MacDonald has joined the ranks of Chicken Little in crying that the sky is falling.

I do not quarrel with Mr. MacDonald's assertion that Wal-Mart, the lead plaintiff in the case, will attempt to utilize the lawsuit as a weapon to further their legendary aggressive business practices. Nor do I disagree with his view that, should Wal-Mart and the other big chain retailers leading this effort prevail, virtually all of the smaller merchants in the plaintiff class will be among the losers.

However, I strongly disagree with his view that MasterCard and Visa cannot win the day in court. Reducing consumer choice in the marketplace is clearly not what Congress had in mind when it passed the antitrust laws.

Mr. MacDonald bases his "all is lost" opinion in part on Judge Barbara S. Jones' 2001 decision in the Department of Justice antitrust suit against MasterCard and Visa, but it appears that he does not understand, or simply ignores, what she wrote. Judge Jones' decision recognized the competitiveness of the industry and affirmed that the dual structure of the industry has enabled member banks to obtain the benefits of competition between MasterCard and Visa.

In fact, she found: "The members of Visa and MasterCard compete with each other on practically every other dimension that directly impacts consumers, including pricing, fees and finance charges, product features, and other services for cardholders and merchants." She rejected the core element in the Department of Justice's challenge. Her opinion states that "the Department of Justice's examples failed to prove that dual governance has significantly diminished competition and innovation in the credit and charge card industry. …

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