A $7.25 billion antitrust settlement over credit card fees between Visa, MasterCard and millions of retailers was tossed out by the 2nd U.S. Circuit of Appeals in New York. According to Reuters, this is the largest all-cash antitrust case in U.S. history.
According to reports, the case, which began in 2005, was thrown out because some retailers involved were reportedly improperly represented.
This case stems from a long-standing dispute between card networks and merchants over interchange and swipe fees when shoppers use their credit and debit cards in stores to pay. Merchants claimed that the card networks barred them from enabling customers to use a cheaper payment form at checkout. New York Circuit Judge Dennis Jacobs wrote in his findings that the two classes of merchants should never been represented by the same group of lawyers. Those lawyers in this specific case saw $544.8 million in fees alone.
One class of merchants were those that accepted Visa or MasterCard from January 2004 to November 2012, while the second class accepted the cards after 2012. This, the judge claims, posed a "fundamental conflict" because the lawyers may have put them in position to negotiate settlement terms that only benefited one of the classes.
"We have reason to think that that occurred here," and in the end "sapped class counsel of the incentive to zealously represent" the class obtaining injunctive relief, Jacobs said in his findings.
Neither Visa or MasterCard provided immediate comments to Reuters on this development.