NGA, Others File Amended Complaint Against Card Firms and Banks

ARLINGTON, Va. -- The National Grocers Association, Affiliated Foods Midwest Cooperative, Coborn's Incorporated, D'Agostino Supermarkets, and other national trade associations and merchants have filed a consolidated amended complaint against Visa, MasterCard, and a number of major banks in the United States District Court for the Eastern District of New York.

Other national associations joining in the consolidated complaint include the American Booksellers Association, National Association of Convenience Stores, National Association of Truck Stop Operators, National Community Pharmacists Association, National Cooperative Grocers Association, and National Restaurant Association.

The consolidated complaint follows NGA's and its representative members' prior complaint that was filed on Nov. 25, 2005 and is part of the consolidation of the over 40 other class action complaints that were filed by other associations and merchants.

The complaint alleges that America's largest banks unlawfully fix the fees charged to merchants for transactions over the Visa and MasterCard Networks and enact restrictions that prevent merchants from protecting themselves against those fees.

"Soaring interchange fees are devastating the retail industry and increasing costs for all American consumers regardless of the form of payment," said Thomas K. Zaucha, NGA president and c.e.o., in a statement. "In a free market, with low interest rates, fraud down, and transaction volume up, competition would cause interchange fees to decrease. However, interchange fees continue to grow exponentially because there is no competitive market.

"NGA, on behalf of its members, has joined in the litigation as part of its efforts to end the collective price fixing of interchange and level the playing field for second and third tier grocery retailers and protect consumers from needless costs," said Zaucha.

NGA is one of the founding members of the Merchants Payments Coalition, a coalition of some 20 trade associations representing retailers, restaurants, supermarkets, drug stores, convenience stores, gas stations, online merchants and other businesses that accept debit and credit cards.

"The system is clearly broken," said Mallory Duncan, chairman of the MPC and s.v.p. and general counsel at the National Retail Federation. "In virtually every other market, competition results in lower prices for consumers, but that's not the case with interchange fees. Instead Visa and MasterCard compete to charge the highest interchange fees in order to provide the banks that issue their cards with maximum profits. Whether debit or credit cards, the fact is that Visa and MasterCard charge Americans some of the highest interchange fees in the world," he said.

Several members of the MPC are litigants in the lawsuit, including the National Association of Convenience Stores, the National Grocers Association, the National Restaurant Association, and the National Association of Truck Stop Operators.

Read more about this hot topic in Progressive Grocer's May 1 cover story, "The Tipping Point."
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