Corporate Antitrust Affirmative Recovery
The firm is also actively involved in corporate antitrust affirmative recovery, primarily in the area of litigation against major credit card networks. Just as individuals can suffer damages at the hands of corporations, so too can corporations be victimized-- whether by price fixing of other corporate cartels or through other anticompetitive conduct. These claims can be extremely valuable assets that corporate clients companies are increasingly willing and motivated to monetize on behalf of their shareholders.
In re Payment Card Merchant Discount and Interchange Fee Antitrust Litigation, MDL No. 1720 (E.D.N.Y)
Crowley Norman LLP is actively involved in several antitrust cases asserting claims against major credit card networks resulting from inflated, non-competitive interchange fees. Banks earn income on credit and debit cards through the interchange fees paid by merchants. Interchange fees are imposed on merchants by card networks for the privilege of accepting the issuing bank's card from a consumer as a means of payment. These fees are collected from the merchant and paid to the issuer of the card. The profitability to issuing banks of credit and debit cards directly increases with the size and frequency of transactions in which the cards are used. The major card networks have adopted nearly identical rules, which their member banks agree to and impose on merchants that accept cards issued by those banks. These rules, or competitive restraints, eliminate competition among their member banks for merchant acceptance of credit and debit cards. Because the major card networks have as their members nearly all card issuers in the United States, and because those card issuers have agreed to rules that preclude them from independently competing for merchant acceptance, the card networks and their members have obtained and maintained market power. The exercise of this market power has led merchants to pay excessive interchange fees. In this manner, the major card networks have unlawfully restrained competition in these markets. But for these competitive restraints, competition among issuing banks for merchant acceptance would result in significantly lower interchange fees.
Crowley Norman LLP has successfully represented almost 100 major retailers in the MDL 1720 Opt-Out Litigation against Visa and MasterCard stemming from these competitive restraints. The firm's clients include such major domestic and international airlines as Delta Airlines, Air France, Air Zealand, El Al Airlines, Etihad Airways, EVA Airways, Qantas Airlines, Scandinavian Airlines, and Singapore Airlines, along with such major retailers as Valero Energy, Reliant (NRG), La Quinta, Callaway Golf, Men’s Wearhouse, Travelocity, Orbitz, Radio Shack, Pier 1, Bass Pro Outdoor World, Ross Stores, Ethan Allen, Waffle House, and many other merchants spanning various industry sectors, including airlines, travel & entertainment, convenience stores, retail, energy, hotel, universities, and municipalities.
Affirmative Recoveries Against Visa and MasterCard for European Merchants
European merchants who accept MasterCard and Visa as forms of payment may be able to recover significant money damages owed to them as a result of anticompetitive practices by the two card networks. Following a series of recent enforcement actions against MasterCard and Visa by the European Commission, several large merchants have initiated competition law actions against MasterCard and Visa in the High Court in the United Kingdom. The Commission and the merchant plaintiffs allege that MasterCard and Visa have imposed anticompetitive Multilateral Interchange Fees (“MIFs”) on merchants who accept MasterCard and Visa as payment for goods and services.
Crowley Norman LLP has teamed up with prominent Los Angeles-based antitrust firm Strange & Butler and London-based competition firm Reynolds Porter Chamberlain ("RPC") to assert these EU-based antitrust claims against Visa and MasterCard. The firms currently represent 40 merchant clients, including over 30 international airlines. If you are interested in discussing joining our EU Visa/MasterCard client group, please contact Rich Norman at 713.651.1771.
American Express Discount Fee Antitrust Recovery
A number of antitrust actions against American Express (“Amex”) have been pending for several years in the Eastern District of New York in a multi-district litigation captioned In re American Express Anti-Steering Rules Antitrust Litig. (No. II), 11-MD-2221 (E.D.N.Y.) (Judge Garaufis) (“Amex II”). The plaintiff merchants allege that Amex has imposed anticompetitive anti-steering rules (“ASRs”) that have allowed Amex to artificially inflate the merchant discount fees Amex charges merchants to accept Amex cards. The ASRs prevent merchants from using price and other means at the point of sale to steer customers to less costly forms of payment, thereby insulating Amex from competition.
In many respects, the cases against Amex parallel those against Visa and MasterCard in In re Payment Card Merchant Discount and Interchange Fee Antitrust Litigation, MDL No. 1720 (E.D.N.Y), which involves allegations that very similar anticompetitive ASRs imposed by Visa and MasterCard artificially inflated the interchange fees Visa and MasterCard charge merchants to accept their cards. However, whereas the interchange fee class actions against Visa and MasterCard settled with significant monetary payments for the class, the Amex class actions settled with no monetary payments for the class; this is a consequence of a recent decision by the U.S. Supreme Court in a related case against Amex that upheld Amex's arbitration and class action waiver provisions with merchants and hindered the class case against Amex. Currently, the only merchants who will be able to recover money from Amex are those who pursue their claims themselves in arbitration.
Merchants who have paid substantial discount fees to Amex should consider pursuing their claims against Amex. We believe the claims against Amex are strong. Amex has and has exercised market power in violation of Section 2 of the Sherman Act because it can and has raised its merchant discount fees without any significant loss in business. Because it is not economically feasible for merchants who accept Amex cards to cease accepting them, the ASRs prevent Merchants from exposing Amex to competition from other payment methods, which allows Amex to raise prices to supracompetitive levels. The ASRs also violate Section 1 of the Sherman Act because they are included in contracts that unreasonably insulate Amex from competition. There are no pro-competitive justifications for the ASRs, and even if such justifications had existed, any possible pro-competitive benefits could have been obtained by less restrictive alternatives.
Crowley Norman LLP, along with several other nationally prominent law firms, currently represents over 90 corporate merchant clients for the purpose of asserting these antitrust claims against American Express. We have retained the leading experts in the field to assist us in formulated a comprehensive damage model. If you are interested in discussing joining our Amex Discount Fee client group, please contact Rich Norman at 713.651.1771.