Magazine article American Banker

MasterCard Asks Court to Allow Ban on Discover

Magazine article American Banker

MasterCard Asks Court to Allow Ban on Discover

Article excerpt

NEW YORK -- In a pre-emptive move, MasterCard International has asked a federal court to declare that it did not break antitrust laws by rejecting a membership application from Dean Witter, Discover & Co.

The manuever came while Dean Witter, which has been partially spun off by Sears, Roebuck and Co., remains embroiled in a court battle over its attempt to join Visa U.S.A.'s system.

Both bank card associations have barred Dean Witter because they view its Discover card as a direct competitor of the bank credit cards.

|Can't Have It Both Ways'

After initially seeking the Visa membership for Mountain West Financial, a Utah thrift it purchased from the Resolution Trust Corp., Dean Witter applied to MasterCard and was rejected by that association's board last April.

"Discover wants to both compete with and participate in the MasterCard franchise," Peter S.P. Dimsey, the president of MasterCard's U.S. region, said last June. "They can't have it both ways."

MasterCard's filing last week, in U.S. District Court for the Southern District of New York, is a show of solidarity with Visa.

MasterCard sought a declaratory judgment that would affirm its exclusion of the Discover affiliate. The filing was prompted by a letter from Dean Witter's legal counsel that accused MasterCard of violating antitrust law.

MasterCard is arguing that Discover is "competitive with MasterCard for cardholders ... and for merchant patronage."

Antitrust Violation Ruled

A federal jury in Salt Lake City handed Dean Witter a victory last November, concluding that Visa's rejection of MountainWest violated antitrust laws. …

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