LETTER TO THE EDITOR: MC Board Had Independent Antitrust Advice
To the Editor:
Matthew Cantor and Jeffrey Shinder, two lawyers who were part of the legal armada that sued Visa and MasterCard on behalf of merchants and Discover, suggest that banks should take a long view of payment card economics in evaluating payment card rules and practices ["Taking Long-Term Antitrust Potential Seriously," Nov. 26, page 10].
They also advise banks to seek advice from independent lawyers to review any advice they get from Visa or MasterCard.
No one can dispute the importance of evaluating any business practice with a long-term perspective. What is quite in dispute, however, is the suggestion that either the banks or the payment card networks have run their businesses solely with a view to short-run profits or that the banking institutions whose representatives were members of the MasterCard board and approved the interchange and other policies of the networks were not receiving plenty of independent advice from their own counsel.
By way of full disclosure, my firm and I represented MasterCard International's board of directors in the period leading up to the MasterCard initial public offering in order to render independent advice to the board with respect to the antitrust implications of the then-proposed initial public offering. Our role was to help the board design a structure for "new" MasterCard that would insure, to the greatest possible extent, that it was free to engage with its customer financial institutions in precisely the type of long-term strategic collaboration that Mr. Cantor and Mr. Shinder advocate - without the lingering concern that the result could be held to be a horizontal conspiracy that was per se unlawful under the antitrust laws.
On Nov. 25, just one day prior to the publication of Mr. Cantor and Mr. Shinder's article, the U.S. District Court for the Eastern District of New York handed down an opinion vindicating that effort by rejecting a complaint by merchants that the MasterCard public offering was a "pretext" or that it preserved bank control of the company. …