Must Move Forward to Protect Retailers and Consumers From These Hidden Taxes
WASHINGTON, DC — November 10, 2005 — In an amicus curiae brief filed today, the Food Marketing Institute (FMI) urged the U.S. Supreme Court to reject an invitation from Visa to create an antitrust safe harbor allowing Visa and MasterCard to continue to fix credit and debit card interchange fees with their owner/member banks.
FMI joined with the Retail Industry Leaders Association (RILA) in the filing for the case of Texaco v. Dagher, et al. The case involves joint price setting in a Texaco and Shell Oil Company joint venture. If the Court were to endorse the broad antitrust immunity sought by Visa in its own amicus filing, the decision could undermine more than 40 pending cases, including class actions, challenging the fees under Section 1 of the Sherman Act.
Interchange fees are set by the credit card companies and their member banks with no regard for the merchants and, ultimately, consumers who pay them. The fees have increased steadily over the past 10 years. In 2004, Visa, MasterCard and their member banks collected more than $26 billion in interchange fees.
Visa, in its brief supporting the oil companies, actually argues that its (and MasterCard’s) practice of having their member banks collectively fix the price of interchange on every debit and credit transaction should be immune from challenge under Section 1 of the Sherman Act.
FMI told the court that the fees are nothing more than “blatant exercises of market power … and continue to increase at enormous cost to merchants and consumers.”
Explaining the importance of this filing, FMI President and CEO Tim Hammonds said, “Consumers should not have to pay hidden fees set in secret by the credit card companies and banks. Interchange fees continue to rise despite improving technology and declining transaction costs. The credit card companies do not think the laws of competition apply to them.
“It is essential that the antitrust suits to correct this abuse move forward expeditiously and that the current price-fixing scheme is replaced with a transparent, cost-based system for setting fees.”