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MasterCard Settles Lawsuit; Case Could Affect Consumers

MasterCard Settles Lawsuit; Case Could Affect Consumers

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NEW YORK (AP) -- MasterCard International reached a last-minute settlement with Wal-Mart Stores and thousands of other retailers just before their multibillion-dollar lawsuit over debit cards was set to go to trial, a federal judge said Monday.

The surprise announcement by U.S. District Judge John Gleeson -- just as the trial was set to begin -- left Visa USA as the remaining defendant in the closely watched lawsuit.

Gleeson gave no details of what he called the "11th-hour settlement," saying only: "The case is settled as to MasterCard."

He ordered those involved not to speak publicly about the settlement, saying any comments could taint the jury pool. Opening arguments in what was left of the suit were expected later Monday, after jury selection was completed.

A victory for the merchants in the case, which was filed in 1996, could change the way consumers pay for their purchases of goods and services, experts say.

The retailers are suing for billions of dollars. They claim Visa and MasterCard have tried to monopolize the fast-growing market for debit cards in the United States by insisting that merchants who accept their credit cards must also accept their debit cards.

The retailers say the two card companies charge unfair fees, eventually driving up costs for consumers. Visa and MasterCard had said the policy, known as "honor all cards," is important so that consumers can have more choice.

The increasingly popular debit cards deduct cash from consumers' existing bank accounts, rather than building up their debt with credit accounts.

Visa and MasterCard had wanted the merchants to clear those transactions on Visa and MasterCard systems, requiring a customer signature. Merchants say the fees for those systems are too high and would rather clear the transactions on less expensive, independent networks that use personal identification numbers, or PINs, rather than customer signatures.

Earlier this year, MasterCard told the judge it wanted a separate trial, claiming retailers had failed to produce credible evidence that it joined in a conspiracy with Visa to monopolize the debit-card market. The judge denied the motion.

Lawyers for the merchants had declined to place a dollar figure on damages they would seek, but some independent analysts had said Visa and MasterCard together could have been liable for as much as $45 billion.

As Gleeson interviewed possible jurors Monday, he told them the trial could last through the end of July. Any verdict could be delayed for years on appeal, analysts have said.

A MasterCard spokeswoman in the courtroom declined to comment on the settlement, citing the judge's gag order. A Visa spokesman also declined to comment.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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