183 F.Supp.2d 613 (S.D.N.Y. 2001), 98 Civ. 7076, United States v. Visa U.S.A., Inc.

Docket Nº:98 Civ. 7076(BSJ).
Citation:183 F.Supp.2d 613
Party Name:UNITED STATES v. VISA U.S.A. INC., Visa International Corp., and MasterCard International Inc.
Case Date:November 29, 2001
Court:United States District Courts, 2nd Circuit, Southern District of New York

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183 F.Supp.2d 613 (S.D.N.Y. 2001)



VISA U.S.A. INC., Visa International Corp., and MasterCard International Inc.

No. 98 Civ. 7076(BSJ).

United States District Court, S.D. New York.

Nov. 29, 2001

Page 614

John M. Nannes, Melvin A. Schwarz, Joel I. Klein, Rebecca P. Dick, Susan L. Edelheit, Steven Semerano, Kurt Shaffert, Scott A. Scheele, Jeffrey I. Steger, Sean T. Fox, Ahmed Taha, M. J. Moltenbrey, United States Department of Justice, Washington, DC, for plaintiff.

Richard A. Martin, Heller, Ehrman, White McAuliffe, L.L.P., New York City, Eugene F. Bannigan, Morgan, Lewis & Bockius, New York City, Martin L. Seidel, Rogers & Wells, New York City, for defendants.


JONES, District Judge.

This civil action was brought by the Antitrust Division of the Department of Justice, Washington, D.C., against the defendants, VISA U.S.A. INC., ("Visa U.S.A."), VISA INTERNATIONAL CORP., ("Visa International") (collectively "Visa") and MASTERCARD INTERNATIONAL INCORPORATED, ("MasterCard"). The Government alleged, in two

Page 615

counts, that each of the Defendants was acting in violation of Section 1 of the Sherman Antitrust Act, which provides that "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States ... is declared to be illegal." 15 U.S.C. § 1. Count One centered around the governance rules of Visa and MasterCard, which permit members of each association to sit on the Board of Directors of either Visa or MasterCard, although they may not sit on both. Count Two targeted the associations' exclusionary rules, under which members of each association are able to issue credit or charge cards of the other association, but may not offer American Express or Discover cards. For each Count, the Government bore the burden of demonstrating that the restraint has substantial adverse effects on competition.

In a Decision dated October 9, 2001, this court found (1) that the Government failed to prove that the governance structures of the Visa and MasterCard associations have resulted in a significant adverse effect on competition or consumer welfare; but (2) the Government successfully demonstrated that the exclusionary rules and practices of the defendants have resulted in such adverse effect and should be abolished. The Decision contained a Proposed Final Judgment and the parties were invited to submit to the court their comments and objections regarding this proposal.

Each of the parties to this action, as well as several non-parties, submitted proposed modifications to and additional comments regarding this court's Proposed Final Judgment. After full consideration of these submissions, this court makes the following findings and modifications:

Anti-Discrimination Provisions

The Government, as well as Discover, urge this court to adopt "anti-discrimination provisions" that would prevent Visa or MasterCard from enacting or maintaining a rule or practice that treats a member bank's equity ownership in the other three general purpose card networks disparately. Under the Government's proposal, a Defendant would not be prevented from prohibiting or restricting its members from owning equity in any general purpose card network, so long as the defendant's rules did not discriminate among the networks. Although the court continues to believe that if and when a Defendant were to enact such a discriminatory rule or practice it would likely be anti-competitive, it may be challenged under Section III.C. of the Final Judgment. Since this Section broadly prohibits exclusionary issuing rules, more specific provisions are unnecessary.

Dual Issuance of Debit Cards

Visa proposes that the final order be modified to permit Visa and MasterCard to prohibit dual issuance of debit cards in the United States so long as they do not discriminate between the different card networks. Visa currently has such a rule, pursuant to which banks issue either Visa off-line debit cards or MasterCard off-line debit cards but not both. Accordingly, as it now stands, Visa and MasterCard compete against each other for the entire debit card portfolio of each bank. 1 Visa seeks...

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