Magazine article American Banker

10 States Urge Card-Trial Judge Not to Hurt Them

Magazine article American Banker

10 States Urge Card-Trial Judge Not to Hurt Them

Article excerpt

The decision by 10 states to file a brief supporting the Justice Department in its antitrust case against Visa and MasterCard International stems from a 10-year-old lawsuit that these states filed against the card companies over the development of debit cards.

The states, led by Ohio, said their interest in the current case relates to their 1990 antitrust suit against Visa and MasterCard's attempt to create a joint debit card program called Entr e. The states argued that this program would create a monopoly in the point of sale debit card market. The case was settled when Visa and MasterCard abandoned the project and agreed to create separate debit cards.

Ever since, the states have monitored the card associations' adherence to the settlement agreement. Last week, the states filed a friend-of-the-court brief with U.S. District Judge Barbara S. Jones, urging her not to make a decision setting the burden of proof in antitrust cases so high that the states would be hindered in pursuing cases of their own.

The 10 states also include California, Connecticut, Florida, Maryland, Massachusetts, Minnesota, Texas, Utah, and Wisconsin. The friend-of-the-court brief indicates that the states' primary concern is the federal government's charge that Visa and MasterCard acted in concert to stifle product innovations, including smart cards. The states take issue with the card associations' argument that any slowdown in innovation attributable to them caused no specific harm to consumers.

"It is well established that harm to innovation is consumer harm," the brief stated. …

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