[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Notices]
[Pages 38700-38708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16638]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States, et al. v. American Express Company, et al.; Public 
Comments and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below its Response to 
public comments received on the proposed Final Judgment in United 
States, et al. v. American Express Company, et al., Civil Action No. 
CV-10-4496, which was filed in the United States District Court for the 
Eastern District of New York on June 14, 2011. The United States 
received six comments in this case. Pursuant to the June 22, 2011 Order 
of Judge Nicholas G. Garaufis, the United States has been excused from 
publishing the substance of the public comments in the Federal 
Register. The public comments and the United States' Response thereto 
may be found on Department of Justice's Web site at: http://www.justice.gov/atr/cases/americanexpress.html.
    Copies of the comments and the Response are available for 
inspection at the Department of Justice Antitrust Division, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-2481) 
and at the Office of the Clerk of the United States District Court for 
the Eastern District of New York, 225 Cadman Plaza East, Brooklyn, NY 
11201. Copies of any of these materials may be obtained upon request 
and payment of a copying fee.

Patricia A. Brink,
Director of Civil Enforcement.

In the United States District Court for the Eastern District of New 
York

    United States of America, et al., Plaintiffs, v. American 
Express Company, American Express Travel Related Services Company, 
Inc., Mastercard International Incorporated, and Visa Inc., 
Defendants.

Civil Action No. 10-CV-4496 (NGG) (RER)

Response of Plaintiff United States to Public Comments on the Proposed 
Final Judgment

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the 
United States hereby files the public comments concerning the proposed 
Final Judgment in this case and the United States' response to those 
comments. Most of the comments applaud the settlement for lessening the 
restraints on competition in the General Purpose Card industry. None of 
the comments contends that the proposed Final Judgment is contrary to 
the public interest or should not be approved by the Court. The United 
States has carefully considered the various questions and suggestions 
contained in the comments and continues to believe that the proposed 
Final Judgment will provide an effective and appropriate remedy for the 
antitrust violations alleged in the Amended Complaint against 
Defendants MasterCard International Incorporated (``MasterCard'') and 
Visa Inc. (``Visa''). The United States will therefore move the Court 
for entry of the proposed Final Judgment after the public comments and 
this Response have been published in the Federal Register.\1\
---------------------------------------------------------------------------

    \1\ The United States will shortly be filing a motion, pursuant 
to 15 U.S.C. 16(d), to excuse its obligation to publish certain 
voluminous exhibits in the Federal Register. The United States will 
arrange for publication of the comments and this Response once the 
Court has ruled on that motion.
---------------------------------------------------------------------------

I. Procedural History

    The United States and seven Plaintiff States filed the Complaint in 
this case on October 4, 2010. Simultaneously, the Plaintiffs filed a 
proposed Final Judgment as to Defendants MasterCard and Visa and a 
Stipulation consenting to entry of the proposed Final Judgment after 
compliance with the Tunney Act. Defendants American Express Company and 
American Express Travel Related Services Company, Inc., are not parties 
to the proposed settlement and the litigation against them will 
continue. On December 21, 2010, the United States filed an Amended 
Complaint adding eleven additional States as Plaintiffs and an Amended 
Stipulation including those States in the proposed settlement.\2\
---------------------------------------------------------------------------

    \2\ On April 8, 2011, the State of Hawaii withdrew as a 
Plaintiff.
---------------------------------------------------------------------------

    As required by the Tunney Act, the United States (1) filed on 
October 4, 2010, a Competitive Impact Statement (``CIS'') explaining 
the settlement with MasterCard and Visa; (2) caused the proposed Final 
Judgment and CIS to be published in the Federal Register on October 13, 
2010 (75 FR 62858); and (3) published summaries of the terms of the 
proposed Final Judgment and CIS, together with directions for the 
submission of written public comments, in The Washington Post and The 
New York Post for seven days beginning on October 11, 2010 and ending 
on October 17, 2010. The 60-day period for public comments ended on 
December 16, 2010. The United States received six comments, which are 
described below in Section IV, and attached as exhibits hereto.

II. The Amended Complaint and the Proposed Final Judgment

    The Amended Complaint challenges certain of Defendants' rules, 
policies, and practices that impede merchants from providing discounts 
or benefits to promote the use of a competing credit card that costs 
the merchant less to accept (``Merchant Restraints'').\3\ These 
Merchant Restraints have the effect of suppressing interbrand price and 
non-price competition in violation of Section 1 of the Sherman Act, 15 
U.S.C. 1.
---------------------------------------------------------------------------

    \3\ Pursuant to the Stipulation filed with the Court on October 
4, 2010, both Visa and MasterCard have agreed that they ``shall 
abide by and comply with the provisions of the proposed Final 
Judgment, pending the Judgment's entry by the Court, * * * and shall 
* * * comply with all the terms and provisions of the proposed Final 
Judgment as though the same were in full force and effect as an 
order of the Court.'' Stipulation ] 3. Accordingly, Visa and 
MasterCard have ceased enforcing the Merchant Restraints. The 
language of their merchant rules described in this section, however, 
will not be changed until the Court enters the Final Judgment. See 
proposed Final Judgment Sec. Sec.  V.A-D.
---------------------------------------------------------------------------

    The Visa Merchant Restraints challenged in the Amended Complaint 
prohibit a merchant from offering a discount at the point of sale to a 
customer who chooses to use a competitor's General Purpose credit or 
charge Card (``General Purpose Card'') instead of a Visa General 
Purpose Card. Visa's rules do not allow discounts for other General 
Purpose Cards, unless such discounts are equally available for Visa 
transactions. See Amended Complaint ] 26 (citing Visa International 
Operating Regulations at 445 (April 1, 2010) (Discount Offer--U.S. 
Region 5.2.D.2)). The MasterCard Merchant Restraints challenged in the 
Complaint prohibit a merchant from ``engag[ing] in any acceptance 
practice that discriminates against or discourages the use of a 
[MasterCard] Card in favor of any other acceptance brand.'' See Amended 
Complaint ] 27 (quoting MasterCard Rule 5.11.1). This means that 
merchants cannot offer discounts or other benefits to persuade 
customers to use a Discover, American Express, or

[[Page 38701]]

Visa General Purpose Card instead of a MasterCard General Purpose Card. 
Id. MasterCard does not allow merchants to favor competing card brands. 
Id.
    The Merchant Restraints at issue deter or obstruct merchants from 
freely promoting interbrand competition among networks by offering 
discounts, other benefits, or information to encourage customers to use 
a less-expensive General Purpose Card brand or other payment method. 
The Merchant Restraints block merchants from taking steps to influence 
customers and foster competition among networks at the point of sale, 
such as: Promoting a less-expensive General Purpose Card brand more 
actively than any other brand; offering customers a discount or other 
benefit for using a particular General Purpose Card that costs the 
merchant less; posting a sign expressing a preference for another 
General Purpose Card brand; prompting customers at the point of sale to 
use another General Purpose Card brand in their wallets; posting the 
signs or logos of General Purpose Card brands that cost less to the 
merchant more prominently than signs or logos of more costly brands; or 
posting truthful information comparing the relative costs of different 
General Purpose Card brands.
    The Amended Complaint alleges that the Merchant Restraints allow 
Defendants to maintain high prices for network services with confidence 
that no competitor will take away significant transaction volume 
through competition in the form of merchant discounts or benefits to 
customers to use lower-cost payment options. Defendants' prices for 
network services to merchants are therefore higher than they would be 
without the Merchant Restraints.
    Absent the Merchant Restraints, merchants would be free to use 
various methods, such as discounts or non-price benefits, to encourage 
customers to use the brands of General Purpose Cards that impose lower 
costs on the merchants. In order to retain merchant business, the 
networks would need to respond to merchant preferences by competing 
more vigorously on price and service terms. The increased competition 
among networks would lead to lower merchant fees and better service 
terms.
    Because the Merchant Restraints result in higher merchant costs, 
and merchants generally pass costs on to consumers, retail prices are 
higher for consumers. Customers who pay with lower-cost methods of 
payment pay more than they would if Defendants did not prevent 
merchants from encouraging network competition at the point of sale. 
For example, because credit cards that offer rewards tend to be held by 
more affluent buyers, less affluent purchasers using less expensive 
payment forms such as debit cards, cash, and checks effectively 
subsidize expensive premium card benefits and rewards enjoyed by 
premium cardholders.
    The Amended Complaint also alleges that the Merchant Restraints 
have produced a number of other anticompetitive effects, including 
reducing output of lower-cost payment methods, stifling innovation in 
network services and card offerings, and denying information to 
customers about the relative costs of General Purpose Cards that would 
cause more customers to choose lower-cost payment methods. Defendants' 
Merchant Restraints also have heightened the already high barriers to 
entry and expansion in the network services market. Merchants' 
inability to encourage their customers to use less-costly General 
Purpose Card networks makes it more difficult for existing or potential 
competitors to challenge Defendants' market power.
    As more fully explained in the Competitive Impact Statement, the 
proposed Final Judgment prohibits Visa and MasterCard from adopting, 
maintaining, or enforcing any rule, or entering into or enforcing any 
agreement, that prevents any merchant from: (1) Offering the customer a 
price discount, rebate, free or discounted product or service, or other 
benefit if the customer uses a particular brand or type of General 
Purpose Card or particular form of payment; (2) expressing a preference 
for the use of a particular brand or type of General Purpose Card or 
particular form of payment; (3) promoting a particular brand or type of 
General Purpose Card or particular form of payment through posted 
information; through the size, prominence, or sequencing of payment 
choices; or through other communications to the customer; or (4) 
communicating to customers the reasonably estimated or actual costs 
incurred by the merchant when a customer pays with a particular brand 
or type of General Purpose Card. Proposed Final Judgment Sec.  IV.
    The purpose of the proposed Final Judgment is to free merchants to 
provide customers helpful information, discounts, benefits, and choices 
at the point of sale to influence the method of payment customers use. 
Merchants will be able to encourage customers, using the methods 
described in Section IV.A of the proposed Final Judgment, to use, for 
example, a Discover General Purpose Card instead of a Visa General 
Purpose Card. Merchants will also be able to encourage the use of any 
other payment form, such as cash, checks, or debit cards, by using the 
methods described in Section IV.A.
    To facilitate merchants' ability to encourage customers to use 
particular General Purpose Cards, the proposed Final Judgment prevents 
Visa and MasterCard from blocking their acquiring banks from supplying 
merchants with information that might assist merchants' identification 
of the less costly General Purpose Cards.
    The proposed Final Judgment requires Visa and MasterCard, within 
five days of entry of the Judgment, to ``delete, discontinue, and cease 
to enforce'' any rule that would be prohibited by Section IV of the 
Final Judgment and to implement specific changes to their existing 
rules and regulations governing merchant conduct. Visa and MasterCard, 
through their acquiring banks, must notify merchants of the rules 
changes mandated by the Final Judgment, and of the fact that merchants 
are now permitted to encourage customers to use a particular General 
Purpose Card or form of payment. Visa and MasterCard must also provide 
notice to the Plaintiffs of certain future rule changes.
    The prohibitions and required conduct in the proposed Final 
Judgment achieve all the relief sought from Visa and MasterCard in the 
Complaint, and thus fully resolve the competitive concerns raised by 
those Defendants' Merchant Restraints challenged in this lawsuit.

III. Standard of Judicial Review

    The Tunney Act requires that proposed consent judgments in 
antitrust cases brought by the United States be subject to a sixty-day 
comment period, after which the court shall determine whether entry of 
the proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
16(e)(1). In making that determination, the court, in accordance with 
the statute as amended in 2004, is required to consider:

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.


[[Page 38702]]


    15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the United 
States is entitled to ``broad discretion to settle with the defendant 
within the reaches of the public interest.'' United States v. Microsoft 
Corp., 56 F.3d 1448, 1461 (DC Cir. 1995); accord United States v. Alex 
Brown & Sons, Inc., 963 F. Supp. 235, 238 (S.D.N.Y. 1997) (noting that 
the court's role in the public interest determination is ``limited'' to 
``ensur[ing] that the resulting settlement is `within the reaches of 
the public interest''') (quoting Microsoft, 56 F.3d at 1460), aff'd sub 
nom. United States v. Bleznak, 153 F.3d 16 (2d Cir. 1998); United 
States v. KeySpan Corp., No. 10 Civ. 1415(WHP), 2011 WL 338037, at *3 
(S.D.N.Y. Feb. 2, 2011) (same); United States v. SBC Commc'ns, Inc., 
489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public interest standard 
under the Tunney Act); United States v. InBev N.V./S.A., 2009-2 Trade 
Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, No. 08-1965 (JR), at 
*3, (D.D.C. Aug. 11, 2009) (noting that the court's review of a consent 
judgment is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanism to enforce the final judgment are clear and manageable.'').
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, a court considers under the APPA, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the United States' complaint, whether the 
decree is sufficiently clear, whether enforcement mechanisms are 
sufficient, and whether the decree may positively harm third parties. 
See Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; Alex Brown, 963 F. Supp. at 238; 
United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); 
InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that:

    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\4\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 (noting the need 
for courts to be ``deferential to the government's predictions as to 
the effect of the proposed remedies''); Alex Brown, 963 F. Supp. at 239 
(stating that the court should give ``due deference to the Government's 
evaluation of the case and the remedies available to it''); United 
States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 
2003) (noting that the court should grant due respect to the United 
States' ``prediction as to the effect of proposed remedies, its 
perception of the market structure, and its views of the nature of the 
case'').
---------------------------------------------------------------------------

    \4\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''); see generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 
1985) (approving the consent decree even though the court would have 
imposed a greater remedy). To meet this standard, the United States 
``need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 
489 F. Supp. 2d at 17; accord KeySpan, 2011 WL 338037, at *3.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). Because the ``court's authority to review the decree 
depends entirely on the government's exercising its prosecutorial 
discretion by bringing a case in the first place,'' it follows that 
``the court is only authorized to review the decree itself,'' and not 
to ``effectively redraft the complaint'' to inquire into other matters 
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60. 
As the United States District Court for the District of Columbia 
recently confirmed in SBC Communications, courts ``cannot look beyond 
the complaint in making the public interest determination unless the 
complaint is drafted so narrowly as to make a mockery of judicial 
power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments,\5\ Congress made clear its intent to 
preserve the practical benefits of utilizing consent decrees in 
antitrust enforcement, adding the unambiguous instruction that 
``[n]othing in this section shall be construed to require the court to 
conduct an evidentiary hearing or to require the court to permit anyone 
to intervene.'' 15 U.S.C. 16(e)(2). This language effectuates what 
Congress intended when it enacted the Tunney Act in 1974. As Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Senator Tunney). Rather, the procedure for the public interest

[[Page 38703]]

determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\6\
---------------------------------------------------------------------------

    \5\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for the court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
    \6\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
---------------------------------------------------------------------------

IV. Summary of Public Comments and the United States' Response

    During the 60-day comment period, the United States received six 
public comments. While the comments raise a variety of issues, no 
commenter contends that the proposed Final Judgment is contrary to the 
public interest or that it should not be entered by the Court. Some of 
the comments seek clarifications or explanations, and these are 
provided below. Some of the comments contain suggestions for modifying 
the terms of the proposed Final Judgment. For the reasons explained 
below, the United States has concluded that these proposed changes are 
either outside the scope of the Amended Complaint; unnecessary, in 
light of market facts, to achieve sufficient relief; or unnecessary due 
to the existing provisions of the proposed Final Judgment. Accordingly, 
the United States believes that the Court should enter the proposed 
Final Judgment as originally submitted.

A. Comment From Merchant Class Plaintiffs in In re American Express 
Anti-Steering Rules Antitrust Litigation

    Counsel for merchant class plaintiffs in In re American Express 
Anti-Steering Rules Antitrust Litigation, 06-CV-2974 (S.D.N.Y.), 
asserts that ``it would provide helpful clarity to merchants and other 
participants in the payment card industry to receive an answer'' to 
this question:

    If the Antitrust Division is successful in its action seeking to 
force American Express to rescind its ``anti-steering rules'' (as 
described in the Complaint in the above titled action), would the 
Proposed Final Judgment prevent the Antitrust Division at that point 
from seeking to compel Visa and MasterCard to rescind their no-
surcharge rules?

    The answer to this question is ``no.'' Nothing in the proposed 
Final Judgment would prevent the Antitrust Division from challenging 
any rule of Visa or MasterCard under the antitrust laws in the future. 
In fact, Section VIII of the proposed Final Judgment specifically 
provides that nothing in the Final Judgment ``shall limit the right of 
the United States or of the Plaintiff States to investigate and bring 
actions to prevent or restrain violations of the antitrust laws 
concerning any Rule of MasterCard or Visa, including any current Rule 
and any Rule adopted in the future.''

B. Comment From Individual Merchant Non-Class Plaintiffs

    Counsel for the ``Individual Plaintiffs in direct action (i.e., 
non-class) antitrust claims'' against Visa and MasterCard in In re 
Payment Card Interchange Fee and Merchant Discount Antitrust 
Litigation, MDL 1720 (E.D.N.Y.), and against American Express in 
Walgreen Co. v. American Express Co., et al., No. 08-cv-2317 
(E.D.N.Y.), and other related cases, ``urge[s] the Court to approve the 
proposed Final Judgments because we believe that they are pro-
competitive and in the public interest.'' The comment explains that the 
rules challenged in the Complaint ``restrain network price competition 
for merchant acceptance'' and the proposed Final Judgment will 
``eliminate those anti-competitive rules and further promote 
competition.''
    While the comment supports entry of the proposed Final Judgment, it 
observes that the proposed Final Judgment does not remove other Visa 
and MasterCard restraints, including their prohibitions on merchants 
imposing a fee (surcharge) on consumers to cover merchants' costs of 
accepting Visa and MasterCard General Purpose Cards. The comment 
acknowledges that the United States made clear in the CIS that ``the 
Government is not challenging the networks' no-surcharge rules or other 
network restraints `[a]t this time,'' and has left open the possibility 
that it could do so in the future.'' To the extent the comment can be 
construed as suggesting that the United States should have challenged 
the Defendants' no-surcharge rules as well, this consideration is not 
relevant to the Court's Tunney Act analysis. In its Tunney Act review, 
the Court may consider only those claims that the United States, in the 
exercise of its prosecutorial discretion, asserted in its Complaint. 
United States v. Microsoft Corp., 56 F.3d 1448, 1459-60 (DC Cir. 1995); 
United States v. Archer-Daniels-Midland, 272 F. Supp. 2d 1, 6 (D.D.C. 
2003) (``the court is not to review allegations and issues that were 
not contained in the government's complaint''). As the United States 
made clear in its CIS, and as the comment acknowledges, this Complaint 
does not challenge Visa's and MasterCard's prohibitions on surcharging. 
CIS at 16 n.3. Accordingly, that issue is not part of the Tunney Act 
proceeding. We reiterate, however, as noted above, that nothing in the 
proposed Final Judgment would prevent the Antitrust Division from 
challenging any rule of Visa or MasterCard under the antitrust laws in 
the future.

C. Comment From Consumer World

    Consumer World states that it ``is a leading public service 
consumer education website.'' It is concerned that the discounts that 
merchants are permitted to offer under the proposed Final Judgment 
might turn into surcharges. In Consumer World's view, merchants might 
choose to advertise ``cash only'' prices, and those who choose not to 
pay with cash ``might be asked to pay a higher price--a surcharge--if 
choosing to use plastic.'' To prevent this, Consumer World suggests 
that ``the settlement should specifically ban surcharges.'' Relatedly, 
Consumer World is also concerned that, unless the proposed Final 
Judgment imposes a requirement that merchants fully disclose to 
consumers that prices may vary depending on the payment method used, 
consumers might perceive that they are paying a higher price for using 
credit and charge cards. Consumer World suggests that the decree create 
rules about how merchants disclose prices in advertisements, in-store 
displays, and online. Consumer World believes these rules should be 
implemented through Visa's and MasterCard's merchant agreements.
    With respect to Consumer World's suggestion that the proposed Final 
Judgment ``should specifically ban surcharges,'' the United States 
notes that the Amended Complaint in this case does not challenge the 
Defendants' prohibitions on surcharges. See CIS at 16 n.3. Accordingly, 
the proposed Final Judgment does not prohibit Visa and MasterCard from 
retaining their existing policies against surcharging, to the extent 
those policies do not conflict with the requirements of the proposed 
Final Judgment. A number of states also restrict surcharges by statute; 
those restrictions are similarly unaffected by this settlement. Thus, 
Consumer World's concern that the decree might free merchants to begin 
surcharging

[[Page 38704]]

General Purpose Card users is unfounded.\7\
---------------------------------------------------------------------------

    \7\ The United States further believes that modifying the 
proposed Final Judgment to ban surcharging is not appropriate 
because, as noted above in Section IV.A of this Response, the United 
States retains the power to determine that the Defendants' no-
surcharge rules are anticompetitive and to challenge them as 
violations of the antitrust laws. The Final Judgment should not 
foreclose the United States from taking such future enforcement 
action. The United States also notes that the question of Visa's and 
MasterCard's rules against surcharging is at issue in other 
litigation in this District. In re Payment Card Interchange Fee & 
Merch. Disc. Antitrust Litig., MDL 1720 (E.D.N.Y.).
---------------------------------------------------------------------------

    Consumer World's suggestion that the proposed Final Judgment should 
impose restraints on merchant behavior is not appropriate for several 
reasons. First, merchants are not parties to this case and cannot be 
bound by the proposed Final Judgment. The Amended Complaint challenges 
only the Defendants' rules and does not allege that any merchants are 
violating the antitrust laws. Moreover, because merchant practices 
concerning price labeling and product advertising are not challenged in 
the Amended Complaint, relief directed at those practices would not be 
justified. See Microsoft, 56 F.3d at 1460 (``And since the claim is not 
made, a remedy directed to that claim is hardly appropriate'').
    Consumer World's suggestion that the decree should require Visa and 
MasterCard to incorporate restrictions on merchant pricing and 
advertising practices is inconsistent with the primary goal of the 
decree, which is to remove Visa and MasterCard restrictions on merchant 
competitive practices that may encourage, or steer, customers to choose 
a less-expensive payment choice over a more-expensive one. Finally, to 
the extent Consumer World is concerned about merchants engaging in 
misleading ``bait advertising'' or similar deceptive practices that 
would result in consumers paying higher prices, the United States notes 
that the decree does not displace any existing state and Federal 
consumer protection statutes that address these practices. For these 
reasons, Consumer World's proposals should not be adopted.

D. Comment From Retail Industry Leaders Association

    The Retail Industry Leaders Association (``RILA'') ``welcomes the 
settlement reached by Plaintiffs and MasterCard International 
Incorporated and Visa Inc. as it could help facilitate competition in 
the General Purpose Card market, particularly price competition that 
could benefit merchants and consumers.'' RILA advocates certain 
additional relief and requests clarification of two provisions in the 
proposed Final Judgment. The United States responds to each of these 
points separately below, accepting the two clarifications and noting 
that the requested additional relief is addressed in part by an 
electronic service Visa offers and MasterCard will soon offer.
1. Steering Among Card Types
    The proposed Final Judgment removes restrictions on three kinds of 
merchant competitive behavior: (a) Steering among General Purpose Card 
brands, or networks (e.g., from Visa to Discover); (b) steering among 
payment methods (e.g., from a MasterCard General Purpose Card to PayPal 
or a debit card); and (c) steering among card types (e.g., from an 
expensive Visa rewards General Purpose Card to a cheaper non-rewards 
Visa or MasterCard General Purpose Card). The Amended Complaint focuses 
primarily on the first two types of steering. RILA's comment addresses 
the third type of steering.\8\
---------------------------------------------------------------------------

    \8\ More specifically, RILA's first point relates to only one 
form of steering protected by the proposed Final Judgment, i.e., 
steering by card type. The card ``type'' refers to the categories of 
General Purpose Cards established by the Defendants--for example, 
rewards cards, non-rewards cards, or premium cards like the 
MasterCard World card or Visa Signature card. See Proposed Final 
Judgment Sec.  II.16 (defining ``Type''). The intrabrand steering 
that would be exercised if a merchant encourages a consumer to use a 
standard Visa General Purpose Card rather than a high-cost Visa 
rewards General Purpose Card is not the major focus of the Amended 
Complaint. But steering by card type can implicate the type of 
interbrand competition that is the principal focus of the Amended 
Complaint when merchants encourage consumers, for instance, to use a 
low-cost standard Visa General Purpose Card rather than a high-cost 
rewards MasterCard General Purpose Card.
---------------------------------------------------------------------------

    RILA observes that, to effectively steer consumers ``from expensive 
Visa and MasterCard credit cards to cheaper forms of payments * * * 
merchants need to know which type of cards they are receiving at the 
point of sale.'' RILA expresses concern that merchants cannot always 
distinguish a General Purpose Card with a high interchange fee from one 
with a lower interchange fee. The issue RILA raises is an important 
one. If a merchant cannot distinguish, for instance, a Visa rewards 
card carrying a high interchange fee from a lower-cost card (issued by 
either Visa or another network) or another less-costly form of payment, 
the merchant would be limited in its ability to steer consumers to, for 
example, the lower-cost General Purpose Card.\9\
---------------------------------------------------------------------------

    \9\ The most significant form of steering protected by the 
proposed Final Judgment--among General Purpose Card networks--can be 
implemented without any new identification measures because the 
brand (Discover, American Express, Visa, MasterCard, etc.) is almost 
always clearly indicated on the face of a card. Another important 
form of steering protected by the proposed Final Judgment--from 
General Purpose Cards to another form of payment--is also easily 
implemented by merchants. Most of these alternative forms of 
payment, such as debit cards, checks, and cash, are clearly 
distinguishable from credit and charge cards.
---------------------------------------------------------------------------

    In response to RILA's comment, the United States explored with Visa 
and MasterCard how to address the concern that merchants' ability to 
distinguish among types of General Purpose Cards is limited. RILA 
sought an ``electronic means to identify the Types of Visa and 
MasterCard General Purpose Cards that qualify for distinct interchange 
tiers, based on the Type of Card.'' RILA Comment at 15. The United 
States learned that Visa offers, and MasterCard will soon offer, such 
an electronic means to differentiate among card types.\10\ These 
electronic services address the concern raised by RILA for many 
merchants.
---------------------------------------------------------------------------

    \10\ RILA preferred that the electronic identification of the 
card ``Type'' be encoded on the magnetic stripe of each card. The 
electronic inquiry service, described below, while a different 
system, does enable a merchant to ``identify the Types of Visa and 
MasterCard General Purpose Cards that qualify for distinct 
interchange tiers, based on the Type of Card.''
---------------------------------------------------------------------------

    The United States recognizes that these services are not a complete 
solution for merchants as some may require additional terminal 
programming and coordination with the merchants' Acquiring Banks,\11\ 
and the services will not be available during periods when electronic 
communications among the merchant, the Acquiring Bank, and Visa or 
MasterCard are not working. It is possible that if an additional 
component of RILA's proposed relief were imposed (i.e., if there were a 
mandatory unique visual identifier for each type of card subject to a 
different interchange fee tier), it would be easier for merchants to 
identify for consumers the lower-cost cards for which a discount or 
other inducement might be available.\12\ On

[[Page 38705]]

balance, however, the United States concludes that the proposed Final 
Judgment is a sufficient and appropriate remedy for the restrictions on 
competition that were alleged as violations in the Complaint. The 
United States will continue to give attention to other matters 
affecting competition in this important industry, which has been the 
subject, recently, of not only the current enforcement action but also 
of other antitrust enforcement actions, private litigation, 
legislation, and regulatory actions. The proposed Final Judgment 
ensures that Visa and MasterCard will not continue the challenged 
restrictions on competitive steering by merchants, and the elimination 
of those restrictions will benefit the public interest as this industry 
continues to evolve.
---------------------------------------------------------------------------

    \11\ Acquiring Banks are entities ``authorized by MasterCard or 
Visa to enter into agreements with Merchants to accept MasterCard's 
or Visa's General Purpose Cards as payment for goods or services.'' 
Proposed Final Judgment Sec.  II.1. They are sometimes referred to 
in the industry as acquirers. An Acquiring Bank ``manages the 
merchant's relationship with Visa and MasterCard'' (Amended 
Complaint ] 15) and is responsible for paying the merchant for 
purchases made with Visa and MasterCard General Purpose Cards and 
distributing the portions of the card acceptance fees owed to the 
issuing banks and the networks. See CIS at 3. Merchants choose which 
Acquiring Bank they want to use, and Acquiring Banks compete with 
each other to sign up merchants. There are a substantial number of 
Acquiring Banks in competition for merchant business.
    \12\ The decree does not require Visa and MasterCard to add 
particular visual identifiers to their products. Each network's most 
expensive cards (Visa's ``Signature'' cards and MasterCard's 
``World'' and ``World Elite'' cards) are already, in many 
circumstances, visually identifiable. Also, imposing this 
requirement on Visa or MasterCard (or, more specifically, on their 
issuing banks) would come with some disadvantages, and the United 
States determined that these disadvantages likely exceeded the 
benefits of such an approach at this point in time. Visa and its 
issuing banks, for example, have developed 33 product types and may 
well develop new products in the future. A requirement that General 
Purpose Card issuers restrict their offerings to a workably small 
number of card types or tiers could impede their incentives and 
abilities to continue to develop products as they seek to appeal to 
consumers. In this context, any additional benefit of imposing 
detailed requirements (e.g., concerning the appearance or other 
attributes of General Purpose Cards or specifically defining or 
limiting interchange fee tiers) for General Purpose Cards on Visa, 
MasterCard, and their card issuers did not appear to be great enough 
to justify the disadvantages of such requirements, particularly in 
light of continuing change in the industry.
---------------------------------------------------------------------------

a. Visa's and MasterCard's Inquiry Services
    Merchants are able to determine the type of Visa card presented at 
the point of sale using an electronic inquiry currently available 
through the Visa network. Visa has many different types of General 
Purpose Cards. Declaration of Judson Reed ] 3 (attached as Exhibit 14). 
A merchant wishing to identify the type of a Visa General Purpose Card 
presented by a customer would be able to initiate an inquiry to the 
Visa network using Visa's ``Product Eligibility Inquiry Service.'' Id. 
] 4. Visa's electronic response would contain the product 
identification code that indicates the card type. Id. Merchants can 
make the product eligibility inquiry without having to initiate a sales 
transaction authorization request to Visa. Id. As described below, 
merchants can use this product code to determine the interchange and 
other fees associated with that card type.
    MasterCard will soon have a similar electronic inquiry system. 
MasterCard assigns unique product identification codes and account 
category indicators to its various card types. Declaration of Brad 
Tomchek ] 4 (attached as Exhibit 16). MasterCard has represented to the 
United States that, in August 2011, it will introduce an electronic 
inquiry service, called the ``Product Validation Service.'' Id. ] 7. As 
with Visa's service, MasterCard's new service will allow merchants to 
receive a message from the MasterCard network that indicates the 
customer's card type, without having to initiate any transaction 
authorization request. Id. ]] 9-10.
b. Using the Inquiry Services to Determine the Cost Associated With a 
General Purpose Card
    Merchants or their Acquiring Banks can use the product type 
information supplied by each network's service to determine the 
interchange fees associated with the credit card swiped by the 
consumer. See Tomchek Decl. ] 11; Reed Decl. ] 5. Visa and MasterCard 
are prohibited, under Section IV.D of the proposed Final Judgment, from 
blocking Acquiring Banks from providing this pricing information to 
merchants. Competition among Acquiring Banks will give them incentives 
to find new and innovative ways to meet merchant demand for information 
and technology that will allow them to implement their desired steering 
methods. Acquiring Banks that find efficient and useful ways to meet 
merchants' new-found demand will win more merchant business.
c. Visa and MasterCard Will Not Charge a Fee for the Inquiry Services
    Both Visa and MasterCard have represented to the United States that 
they are not charging a fee, either to merchants or to Acquiring Banks, 
for their electronic inquiries.\1\\3\ Reed Decl. ] 9; Tomchek Decl. ] 
8. If Visa or MasterCard impose or increase fees associated with these 
services and, as a result, prevent or restrain merchants from engaging 
in protected steering activities, they face consequences under the 
proposed Final Judgment. Section IV.A provides that neither Visa nor 
MasterCard may adopt or maintain any policy or practice (both of which 
are encompassed within the term ``Rule'' defined in Section II.15 of 
the proposed Final Judgment) that ``directly or indirectly prohibits, 
prevents, or restrains'' merchants from engaging in the steering 
methods described in IV.A.1-8. If Visa or MasterCard were to 
discontinue its service or increase its fees, its new practice might 
prevent or restrain merchants from steering from high-cost Visa or 
MasterCard rewards cards to other card types or other payment forms--
conduct which merchants are permitted to engage in under Section IV.A 
of the proposed Final Judgment. Visa and MasterCard have each 
acknowledged in writing that, if the United States presents facts 
demonstrating that the discontinuation of their electronic inquiry 
services, or fees charged for them, prevented or restrained merchants 
from engaging in protected steering practices, they would be in 
violation of the proposed Final Judgment. See Exhibits 15, 17.
---------------------------------------------------------------------------

    \13\ Although Visa and MasterCard are not assessing a fee, it is 
possible that a merchant's Acquiring Bank may decide to charge a fee 
for this service. The proposed Final Judgment does not govern the 
conduct of Acquiring Banks, which are not parties to this 
proceeding. Competition among Acquiring Banks should aid in keeping 
any such fees in check.
---------------------------------------------------------------------------

2. RILA's Requests for Clarification of the Proposed Final Judgment
    RILA seeks clarification on two other portions of the proposed 
Final Judgment. As explained below, the United States concurs in the 
interpretations RILA seeks.
    First, RILA requests clarification that Section IV.D of the 
proposed Final Judgment ``would prohibit Visa and MasterCard from 
preventing, in any way, merchant access to electronic information or 
data that can be used to identify Types of General Purpose Cards, 
including the Types of General Purpose Cards that qualify for distinct 
interchange tiers.'' RILA Comment at 15 n.12.
    The proposed Final Judgment does prohibit the conduct that RILA 
identifies. As discussed above, Section IV.D of the proposed Final 
Judgment prohibits Visa and MasterCard from preventing Acquiring Banks 
from providing to merchants ``information regarding the costs or fees 
the Merchant would incur in accepting a General Purpose Card, including 
a particular Type of General Purpose Card, presented by the Customer as 
payment for the Customer's transaction.'' This prohibition would cover 
any information or data that is reasonably necessary for a merchant to 
determine its costs or fees for acceptance of a General Purpose Card or 
of a particular Type of General Purpose Card, including the 
``electronic information or data'' to which RILA's comment refers. Visa 
and MasterCard may not prohibit Acquiring Banks from sharing such 
information with merchants. In addition, the language in Section IV.A 
that restrains Visa and MasterCard from ``directly or indirectly'' 
blocking merchants from engaging in certain

[[Page 38706]]

conduct to encourage consumers to use a particular General Purpose Card 
would prevent Visa and MasterCard from interfering with merchants' 
ability to obtain and use information or data reasonably necessary to 
engage in that conduct.
    Second, RILA seeks confirmation that ``Section [IV.B.4] will not be 
interpreted to enable Visa and MasterCard to maintain rules that would 
prevent merchants from steering consumers from more expensive Visa or 
MasterCard rewards credit cards issued by one bank to a less expensive 
Visa or MasterCard credit card issued by another bank.'' RILA believes 
``it would be helpful to clarify that the Section [IV.B.4] will not 
derogate from the rights merchants are to be provided under Section 
IV.A of the Final Judgment.''
    RILA is correct that Section IV.B.4 does not derogate from the 
rights provided in Section IV.A. Section IV.B.4 is intended to allow 
Visa and MasterCard to maintain network rules that prohibit merchants 
from engaging in steering based on the identity of the issuing bank (as 
the Amended Complaint does not challenge such rules). The proposed 
Final Judgment allows Visa and MasterCard to block merchants from 
discriminating against the cards of one issuing bank over another 
issuing bank, based on the identity of the bank. Section IV.B.4, 
however, does not limit the ability of merchants to steer on the basis 
of card brand or type. Therefore, in RILA's hypothetical example, Visa 
or MasterCard could not prohibit a merchant from steering from Bank A's 
rewards Visa card to Bank B's non-rewards Visa card on the basis of 
card type (rewards vs. non-rewards), even though the two cards were 
issued by different banks. Similarly, a merchant would be permitted to 
steer from Bank A's Visa to Bank B's MasterCard on the basis of brand 
(Visa vs. MasterCard). Section IV.B.4, however, does allow Visa and 
MasterCard to have rules prohibiting merchants from distinguishing 
between Bank A's and Bank B's General Purpose Cards based solely on the 
identities of the banks. Thus, Section IV.B.4 is not in conflict with 
the rights conferred by Section IV.A.

E. Comment From Sears Holdings Corporation

    Sears Holdings Corporation, ``the nation's fourth-largest broad 
line retailer,'' states that it ``supports the DOJ's and participating 
Attorneys General efforts to remove anti-competitive network rules that 
do not foster competition.'' Sears proposes that Section IV.A.8 of the 
proposed Final Judgment ``be interpreted to require that the networks 
and issuing banks clearly identify what type of account is being 
presented to the merchant so that the merchant could readily determine 
if a discount was warranted.'' Sears believes this step is needed 
because ``[u]nder current practices, the merchant cannot know from the 
face of the card which type of card is being presented.'' The United 
States understands Sears' comment to be substantively identical to the 
comment submitted by RILA, to which the United States responded above.
    Sears also comments that ``[a]nother practice that has the effect 
of subverting the Proposed Final Judgment and Stipulation is the lack 
of standards for identifying commercial debit cards.'' It explains that 
commercial debit cards ``are assessed a much higher merchant discount 
fee'' than consumer debit cards. The ``lack of standards precludes the 
merchant from discerning which [debit] cards would qualify for the 
discount versus those that do not.''
    Whatever the merits of this point, it is beyond the scope of this 
case. The Amended Complaint alleges violations relating only to the 
General Purpose Card product market, a market that does not include 
debit cards. Therefore, relief related to the labeling of debit cards 
is outside the scope of the Amended Complaint and is not part of the 
Court's review under the Tunney Act. See Microsoft, 56 F.3d at 1460 
(``And since the claim is not made, a remedy directed to that claim is 
hardly appropriate.'').

F. Comment From MDL 1720 Proposed Class of Merchants

    The proposed class of merchants in In re Payment Card Interchange 
Fee and Merchant Discount Antitrust Litigation, MDL 1720 (E.D.N.Y.) 
submitted a comment stating that ``the Proposed Final Judgment is 
procompetitive and furthers the public interest as required by the 
Tunney Act.'' The comment goes on to observe that (1) the United States 
``can enhance the effectiveness of the proposed relief by interpreting 
the Proposed Final Judgment'' to allow two particular merchant 
practices; (2) the ultimate effectiveness of the proposed Final 
Judgment turns on various future events; and (3) the court should 
impose additional reporting requirements on the parties. The United 
States addresses each point in turn.
1. The Proposed Final Judgment Permits a Broad Variety of Merchant 
Steering Practices
    The comment states that the proposed Final Judgment would be more 
effective if it were interpreted to allow two particular hypothetical 
practices. We will address each separately.
    The comment describes the first practice as follows: ``if merchants 
could display separate prices at the point of sale for purchases made 
on various methods of payment, the merchant could inform the consumer 
of the relative prices of payment methods without placing a `surcharge' 
on the transaction amount.''
    Based on this description, it appears that this practice would be 
permitted by the proposed Final Judgment. In general, the proposed 
Final Judgment effectively removes restraints on a wide variety of 
merchant practices to encourage consumers to use a different payment 
option. With respect to this hypothetical practice--the display of 
``separate prices at the point of sale for purchases made on various 
methods of payment''--the United States notes that provisions of the 
proposed Final Judgment generally would not allow Visa or MasterCard to 
block this practice. First, the proposed Final Judgment permits 
merchants, without interference from Visa or MasterCard:

to ``communicat[e] to a Customer the * * * costs incurred by the 
Merchant when a Customer uses a particular [payment method] or the 
relative costs of using different [payment methods]'' (Sec.  
IV.A.7);
to ``promot[e] a particular [payment method] through posted 
information, through the size, prominence, or sequencing of payment 
choices, or through other communications'' (Sec.  IV.A.6); and
to ``express a preference for'' and encourage customers to use 
particular payment methods (Sec. Sec.  IV.A.4-A.5).

    Merchants may also engage in ``practices substantially equivalent'' 
to these practices (Sec.  IV.A.8). Thus, the proposed Final Judgment 
prevents Visa or MasterCard from prohibiting a merchant from displaying 
a list of various price options for an item depending on payment 
method.\14\
---------------------------------------------------------------------------

    \14\ Section IV.A of the proposed Final Judgment protects the 
conduct of a merchant who is ``offering the Customer a discount or 
rebate.'' Visa or MasterCard may not restrain such a ``discount or 
rebate.'' By contrast, the proposed Final Judgment does not prohibit 
Visa or MasterCard from maintaining their ``no surcharge'' rules. If 
merchants implement any price difference as a ``discount or 
rebate,'' rather than a surcharge, then their conduct is protected 
by the proposed Final Judgment. Courts can distinguish between a 
discount and a surcharge. See Thrifty Oil Co. v. Superior Court, 111 
Cal. Rptr.2d 253 (Cal. Ct. App. 2001) (a gas station that posted 
separate prices for payment by cash or by credit card was offering a 
statutorily-permitted discount for the use of cash and was not 
imposing a surcharge on credit card users, a practice that is 
illegal under state statute; see also Cal. Civ. Code Sec.  1748.1(a) 
(expressly permitting discounts but prohibiting credit card 
surcharges). If a merchant adopts a steering practice to encourage 
consumers to use lower-cost payment forms that is protected by 
Section IV.A of the proposed Final Judgment (such as a ``discount or 
rebate''), then Visa and MasterCard cannot prohibit or restrain that 
practice--even if they try to argue that the practice involves the 
imposition of a surcharge in violation of their rules. By contrast, 
if a merchant adopts a steering practice that involves a surcharge 
(e.g., if a merchant levies a discrete fee at the point of sale on a 
consumer who presents a credit card), then Visa or MasterCard could 
enforce its ``no surcharge'' rule without violating the proposed 
Final Judgment.

---------------------------------------------------------------------------

[[Page 38707]]

    The second hypothetical practice is described as follows: ``if a 
consumer had a payment device that could process a transaction over 
multiple networks, a merchant could obtain a similar result by 
programming its POS device to offer the consumer the option of paying 
with the cheapest network first.'' The same provisions of the proposed 
Final Judgment discussed in the preceding paragraph would also be 
relevant to this second practice. It is not clear from the comment what 
type of consumer ``payment device'' is envisioned, or what information 
the merchant's point-of-sale device would convey. However, Visa and 
MasterCard cannot prevent a merchant from promoting ``a particular 
Brand or Type of General Purpose Card or a particular Form or Forms of 
Payment through * * * sequencing of payment choices * * * '' (Sec.  
IV.A.6). This provision allows merchants to prompt a customer at the 
point of sale to use one or more preferred means of payment.
2. The Facts in the Record Today Support Entry of the Proposed Final 
Judgment
    The comment states that the Court's Tunney Act review ``requires 
assessments of the future'' that take into account not only the 
Proposed Final Judgment, but also events that have not yet come to 
pass, including ``recently-enacted (but not yet implemented) 
legislation, the outcome of MDL 1720, the outcome of merchant 
litigation against American Express and future technological changes 
that may affect the relevant markets.'' Comment at 3.
    The comment makes the observation, which is applicable to all 
settlements, that there is some uncertainty about the future impact and 
effectiveness of any proposed relief. Markets can change over time to 
enhance or diminish the impact of a consent decree. Nevertheless, under 
the Act, the Court must base its decision on the facts in the record 
today. The United States' predictions about how the proposed Final 
Judgment will stimulate competition among General Purpose Card networks 
and benefit consumers, see, e.g., CIS at 9-10 & 14, are entitled to 
deference in this proceeding. Microsoft, 56 F.3d at 1461; Republic 
Services, 723 F. Supp. 2d at 161; Enova, 107 F. Supp. 2d at 18; Archer-
Daniels-Midland Co, 272 F. Supp. 2d at 6; Alex Brown, 963 F. Supp. at 
238-39.
    The proposed Final Judgment is not measured by how it resolves all 
of the concerns about the General Purpose Card industry raised by the 
comment--concerns which, in most cases, are not mentioned in the 
Amended Complaint. The issue before the Court is whether the relief 
resolves the violation identified in the Amended Complaint in a manner 
that is within the reaches of the public interest. Although the case or 
the relief may be narrower than the commenter may prefer, the comment 
acknowledges that the asserted ``narrowness of the Proposed Final 
Judgment does not by itself stand in the way of approval.'' Comment at 
14. The United States will continue to monitor the General Purpose Card 
industry and expressly retains the power to bring other enforcement 
actions where appropriate.
3. No Additional Reporting Requirements Are Necessary
    Lastly, the comment states that ``this Court should consider in its 
retention of jurisdiction requiring periodic reports from the 
Department of Justice, Visa and MasterCard providing information and 
data regarding levels of interchange fees and the price discrimination 
by which Visa, MasterCard and their member banks have exercised their 
substantial market power.'' \15\ The United States does not believe 
that such reports are necessary for the effective enforcement of this 
decree. In contrast to the plaintiffs in MDL 1720, the United States' 
Amended Complaint does not challenge the existence of interchange fees 
or the process by which they are set. The proposed Final Judgment does 
not mandate any particular level of interchange fees. The relief here 
is simple, straightforward, and easily implemented--the decree removes 
the rules that the United States has challenged as anticompetitive and 
restrains Visa and MasterCard from prohibiting the merchant conduct 
protected by the decree. Once Visa and MasterCard have taken the steps 
required by Section V, which will largely be complete within days after 
entry of the Final Judgment, the relief will have been fully 
implemented and no further reporting to this Court is needed to ensure 
compliance. If there are any future concerns about compliance with the 
Final Judgment, the United States has broad powers pursuant to Section 
VI to obtain the appropriate ``books, ledgers, accounts, records, data 
and documents,'' interview employees, solicit written reports and 
written interrogatory responses from Visa and MasterCard, and initiate 
appropriate proceedings to enforce the Final Judgment.
---------------------------------------------------------------------------

    \15\ The comment incorrectly states that the proposed Final 
Judgment has a ``five year term.'' In fact, the term is ten years. 
Proposed Final Judgment, Section IX.
---------------------------------------------------------------------------

V. Conclusion

    After careful consideration of the public comments, the United 
States concludes that entry of the proposed Final Judgment will provide 
an effective and appropriate remedy for the antitrust violations 
alleged in the Amended Complaint and is therefore in the public 
interest. Accordingly, after the comments and this Response are 
published, the United States will move this Court to enter the proposed 
Final Judgment.

Respectfully submitted,

Craig W. Conrath,
Bennett J. Matelson,
Attorneys for the United States, United States Department of 
Justice, Antitrust Division, Litigation III, 450 Fifth Street, NW., 
Suite 4000, Washington, DC 20530, Phone: (202) 532-4560.
E-mail: [email protected].
Dated: June 14, 2011.

Certificate of Service

    I hereby certify that on June 14, 2011, I caused the Response of 
Plaintiff United States to Public Comments on the Proposed Final 
Judgment to be filed via the Court's CM/ECF system, which will 
electronically serve a copy upon the following:

Jonathan Gleklen,

Arnold & Porter LLP, 555 Eleventh Street, NW., Washington, DC 20004.

Robert C. Mason,

Arnold & Porter LLP, 399 Park Avenue, New York, NY 10022-4690, 
[email protected], Counsel for Defendant Visa Inc.

Kenneth E. Gallo,

Paul, Weiss, Rifkind, Wharton & Garrison LLP, 2001 K Street, NW., 
Washington, DC 20006.

Andrew C. Finch,

Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the 
Americas, New York, NY 10019.

Keila D. Ravelo,

Matthew Freimuth, Willkie Farr & Gallagher LLP, 787 Seventh Avenue, 
New York, NY

[[Page 38708]]

10019, Counsel for Defendant MasterCard International Incorporated.

Philip C. Korologos,

Eric Brenner,

Boies, Schiller & Flexner LLP, 575 Lexington Avenue, 7th Floor, New 
York, NY 10022.

Evan R. Chesler,
Kevin J. Orsini,

Cravath, Swaine & Moore LLP, Worldwide Plaza, 825 Eighth Avenue, New 
York, NY 10019, Counsel for Defendants American Express Company and 
American Express Travel Related Services Company, Inc.

Rachel O. Davis,

Assistant Attorney General, 55 Elm Street--P.O. Box 120, Hartford, 
CT 06141-0120, Counsel for Plaintiff State of Connecticut.

Layne M. Lindeback,

Iowa Attorney General's Office, 1305 E. Walnut Street, Des Moines, 
IA 50319, Counsel for Plaintiff State of Iowa.

Gary Honick,

Assistant Attorney General, Office of the Attorney General, 200 St. 
Paul Place, Baltimore, MD 21202, Counsel for Plaintiff State of 
Maryland.

D.J. Pascoe,

Michigan Department of Attorney General, Corporate Oversight 
Division, P.O. Box 30755, Lansing, MI 48911, Counsel for Plaintiff 
State of Michigan.

Anne E. Schneider,

Assistant Attorney General, Attorney General of Missouri, P.O. Box 
899, Jefferson City, MO 65102, Counsel for Plaintiff State of 
Missouri.

Patrick E. O'Shaughnessy,

Mitchell L. Gentile,

Antitrust Section, Office of the Ohio Attorney General, 150 E. Gay 
Street, 23rd Floor, Columbus, OH 43215, Counsel for Plaintiff State 
of Ohio.

Kim Van Winkle,

Bret Fulkerson,

Office of the Attorney General, P.O. Box 12548, Austin, TX 78711-
2548, Counsel for Plaintiff State of Texas.

Nancy M. Bonnell,

Antitrust Unit Chief, Consumer Protection and Advocacy Section, 
Office of the Arizona Attorney General, 1275 West Washington, 
Phoenix, Arizona 85007, Counsel for Plaintiff State of Arizona.

Brett T. DeLange,

Stephanie N. Guyon,

Office of the Attorney General, Consumer Protection Division, 954 W. 
Jefferson St., 2nd Floor, P.O. Box 83720, Boise, Idaho 83720-0010, 
Counsel for Plaintiff State of Idaho.

Robert W. Pratt,

Chief, Antitrust Bureau, Chadwick O. Brooker, Office of the Illinois 
Attorney General, 100 W. Randolph Street, Chicago, Illinois 60601, 
Counsel for Plaintiff State of Illinois.

Chuck Munson,

Assistant Attorney General, Office of the Montana Attorney General, 
215 N. Sanders, Helena, MT 59601, Counsel for Plaintiff State of 
Montana.

Leslie C. Levy,

Chief, Consumer Protection/Antitrust Division, Office of the 
Nebraska Attorney General, 2115 State Capitol Building, Lincoln, NE 
68509, Counsel for Plaintiff State of Nebraska.

David A. Rienzo,

Assistant Attorney General, Consumer Protection and Antitrust 
Bureau, New Hampshire Department of Justice, 33 Capitol Street, 
Concord, New Hampshire 03301, Counsel for Plaintiff State of New 
Hampshire.

Edmund F. Murray, Jr.,

Special Assistant Attorney General, Rhode Island Department of 
Attorney General, 150 South Main Street, Providence, Rhode Island 
02906, Counsel for Plaintiff State of Rhode Island.
Victor J. Domen, Jr.,

Senior Counsel, Office of the Tennessee Attorney General, 425 Fifth 
Avenue North, Nashville, Tennessee 37202, Counsel for Plaintiff 
State of Tennessee.

Ronald J. Ockey,

David N. Sonnenreich,

Assistant Attorney General, Office of the Attorney General of Utah, 
160 East 300 South, Fifth Floor, Salt Lake City, Utah 84111, Counsel 
for Plaintiff State of Utah.

Sarah E.B. London,

Assistant Attorney General, Public Protection Division, Vermont 
Attorney General's Office, 109 State Street, Montpelier, VT 05609-
1001, Counsel for Plaintiff State of Vermont.

Tracey L. Kitzman,

Friedman Law Group LLP, 155 Spring Street, New York, NY 10012, 
Counsel for MDL 2221 Merchant Class Plaintiffs.

William Blechman,

Kenny Nachwalter, P.A., 201 S. Biscayne Boulevard, Suite 1100, 
Miami, FL 33131, Counsel for MDL 2221 Individual Merchant 
Plaintiffs.

Bennett J. Matelson.
[FR Doc. 2011-16638 Filed 6-30-11; 8:45 am]
BILLING CODE P