Overview
Cohen Milstein represents The Pizza Standard LLC and a proposed class of merchants in an antitrust class action that challenges an ongoing conspiracy between Visa, Mastercard, and the nation’s largest banks (the “Bank Defendants”) to artificially inflate the swipe fees that merchants pay on every credit card transaction.
The complaint alleges that through collectively set and effectively non-negotiable fees, Visa, Mastercard, and the Bank Defendants have imposed a toll on virtually every credit card purchase in America, extracting more than $100 billion annually from merchants.
While this conduct was litigated and settled for harm caused before January 2019, it has not stopped. Merchants continue to pay supracompetitive fees to accept defendants’ cards today, at rates that no competitive market would produce.
The Pizza Standard brings this putative class action for financial harms caused by Visa, Mastercard, and the Bank Defendants on behalf of merchants that accepted defendants’ credit cards from January 25, 2019 through the present.
Case Background
Since the 1960s, Visa and Mastercard have worked with their member banks, including the Bank Defendants, to set uniform schedules of so-called swipe fees, effectively non-negotiable charges that merchants must pay to credit card issuing banks on each transaction.
To preserve their elevated swipe fee levels and ensure merchants cannot escape them, the defendants allegedly enacted a web of anticompetitive rules, including:
- Honor-All-Cards rules – Merchants that accept any Visa or Mastercard credit card must accept all such cards, regardless of cost, eliminating any incentive for issuing banks to compete by lowering their fees.
- “No-Surcharge” and “No-Discount” rules – Visa and Mastercard have prevented merchants from using the price mechanism to steer customers to lower-cost payment options.
Plaintiff claims that these interlocking rules, among others, act as restraints and disable the competitive market forces that would otherwise discipline swipe fees, allowing the defendants to raise their fees year after year without consequence.
According to the complaint, Visa and Mastercard further exploit these restraints to artificially inflate their own “network fees” that they charge to each merchant as a cost of accepting their cards. These network fees—which comprise a combination of per-transaction fees and fixed fees—add an additional supracompetitive tax on each credit card transaction. The anticompetitive rules prevent merchants from steering customers to lower-cost options and thus stimulating competition among networks to lower network fees.
Merchants have fought for decades to end this anticompetitive scheme. In 2005, merchants and their trade associations filed lawsuits against the same defendants in In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, No. 05-md-1720 (E.D.N.Y.). In December 2019, the Court approved a damages settlement that provided over $5 billion in monetary relief to merchants—but only for harm suffered during the class period, which ended on January 24, 2019.
A separate equitable relief class action seeking injunctive relief remains ongoing, but even if approved—and even if its proposed changes to the challenged restraints ultimately lessen the defendants’ supracompetitive fees—that settlement will apply only prospectively, and will not provide a single dollar in compensation to merchants for the fees they have paid since January 25, 2019.
As stated in the complaint, there are millions of merchants that began accepting cards only after January 24, 2019. These merchants received no relief in the damages settlement, are not parties to that settlement, and have not even arguably released their claims arising from the defendants’ unlawful conduct. Plaintiff The Pizza Standard LLC first accepted credit cards after January 24, 2019, and seeks to represent millions of similarly situated merchants seeking relief for their ongoing, uncompensated injuries.