[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]
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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\
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\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.
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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\
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\2\ On April 8, 2011, the State of Hawaii withdrew as a
Plaintiff.
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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.
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\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.
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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'').
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\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''').
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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\
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\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.'').
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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\
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\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.).
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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\
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\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.
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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\
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\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.
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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.
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\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.''
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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.
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\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.
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[[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