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LAKELAND, Fla. -- Suing to get out from under onerous interchange fees and "deceptive practices"? Priceless--or at least that's apparently how Publix Super Markets, Inc., sees it. The supermarket chain here yesterday filed a federal lawsuit against Visa and MasterCard alleging that the two credit card giants and their respective member banks are engaging in deceptive practices and restricting competition in violation of antitrust laws.
The Publix suit also claims that the practice of setting credit card fees (called interchange fees) charged to retail merchants is anti-competitive. When a customer uses a credit card, the retailer must pay an interchange fee to the issuing card's bank, without an opportunity to negotiate lower rates.
"In a time when more than 60 percent of our customers prefer to pay by debit or credit card, it is astonishing that interchange rates continue to rise," said Publix's director of media and community relations, Maria Brous. "In our business, our customers benefit from competition. As a result of Visa and MasterCard's business practices, there is no competition among banks and ultimately every consumer pays the price when these credit card companies and their member banks impose 'hidden fees' on retailers."
Publix joins a high-profile club. In August, The Kroger Co. led a group of supermarket and drugstore chains in filing an antitrust lawsuit against MasterCard, on the heels of a similar suit brought against Visa USA in July, over rising fees. In MasterCard suit, other plaintiffs were Albertsons, Inc.; Safeway, Inc.; Ahold USA, Inc.; Walgreen Co.; Jean Coutu Group, Inc.'s Maxi Drug Inc.; and Eckerd Corp, a unit of CVS Corp. (See: http://www.progressivegrocer.com/progressivegrocer/firc_new/search/article_display.jsp?vnu_content_id=1001010269 )
The flurry of supermarket litigation, in turn, followed an antitrust class action filed by four major trade groups representing other retail industries alleging Visa, MasterCard, Bank of America, Citibank, Bank One, Chase Manhattan Bank, J.P. Morgan, Chase, Fleet Bank, Capital One, and other banks were engaging in collusive practices by setting credit card interchange fees at "supracompetitive levels." (See http://www.progressivegrocer.com/progressivegrocer/firc_new/search/article_display.jsp?vnu_content_id=1001181510 )
The credit-card companies have disputed the allegations that their practices are anti-competitive and illegal.
Meanwhile, MasterCard, which has announced that it is going public early next year, cited the legal challenges to its ownership structure as one of the reasons it is planning an initial public offering, according to published reports.
After the IPO, outside investors will own between 46 percent and 49 percent of MasterCard's shares and control between 82 percent and 83 percent of the general voting power, according to documents MasterCard has filed with the U.S. Securities and Exchange Commission.