Industry Cheers DOJ Action Against Credit Card Companies

Retail industry groups were heartened by the Department of Justice’s (DOJ) agreement to a settlement with credit card companies Visa and MasterCard, and its decision to open a case against American Express regarding anticompetitive practices.

The DOJ’s action against Visa and MasterCard found that the two credit card companies imposed anticompetitive restrictions that created a market lacing access to adequate information or choice, and prevented merchants from offering customers discounts.

“Merchants, small and large, welcome today’s news,” noted John Emling, SVP of government affairs at Arlington, Va.-based Retail Industry Leaders Association. “[T]he U.S. Department of Justice joins countless legislative and regulatory bodies in the U.S. and around the world [that] have taken action to reign in the anti-competitive practices of the credit card industry.”

According to Emling, the “news from the DOJ, coupled with the actions of Congress and the rulemaking underway at the Federal Reserve, gives merchants across America hope that transparency and accountability will soon be brought to this broken system.”

“This is a monumental development for supermarket retailers an,d most importantly, their customers,” said Leslie G. Sarasin, president and CEO of Arlington-based Food Marketing Institute (FMI). “Supermarkets have been prevented by credit card companies from accepting less expensive forms of plastic, ones that do not require the merchant to pay excessive fees just for the privilege of accepting a particular card, thus essentially preventing competition.”

Continued Sarasin: ”[FMI] and our members have met with officials from the Justice Department during the past several years to explain how anticompetitive practices used by Visa and MasterCard impact supermarkets. We believe this is a positive development when Justice Department action, supported by seven state attorneys general, mirrors legislation passed by Congress and intended to benefit consumers.”

“These anticompetitive practices have gone untouched for decades,” said FMI VP of government relations Jennifer Hatcher. “The Department of Justice deserves credit for taking on the card giants.” She added that the retail industry anticipated the DOJ’s “continued investigations into the bad behavior of the credit card industry.”

At the Arlington-based National Grocers Association (N.G.A.), president and CEO Peter Larkin expressed satisfaction that “Attorney General Holder and Assistant Attorney General Christine Varney have stepped in to send a clear message that anticompetitive practices will not be tolerated."

According to the Washington-based Merchants Payment Coalition, a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses collectively representing about 2.7 million stores with around 50 million employees: “With today’s decision, merchants will now be able to offer consumers discounts between cards—which will for the first time ever force the cards to compete on cost.”

Additionally, this past summer, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which included a provision to reform interchange fees.