December Department of Justice Investigating Interchange Antitrust Violations The Antitrust by carlmartin


									December 5, 2008

Department of Justice Investigating Interchange Antitrust Violations
The Antitrust Division of the U.S. Department of Justice (DOJ) is probing whether certain Visa
and MasterCard interchange policies violate the Sherman Act, according to third quarter finan-
cial statements filed recently by the credit card companies.
Visa’s 10-K statement disclosed that on October 10, 2008, the DOJ requested information about
“VISA U.S.A.s policies regarding merchant surcharging and merchants’ ability to steer custom-
ers to other forms of payment.” This was part of a Civil Investigative Demand regarding a poten-
tial violation of the antitrust laws, according to Visa.
MasterCard reported in a 10-Q filing that DOJ requested similar information on October 14 —
“particularly with respect to merchants’ ability to steer customers to payment forms preferred by
merchants.” The DOJ also sent American Express and Discover queries about their no-
surcharging and anti-steering policies.
At issue are credit card company rules that prohibit retailers from surcharging customers who pay
with credit cards in order to cover the high transaction costs, especially interchange fees. Federal
law requires credit card companies to allow merchants to offer lower prices for products bought
with cash. Some U.S. merchants have tried to offer cash discounts, only to be frustrated by highly
restrictive card company rules governing the way they can offer customers these savings.
The nuances of card company rules make the cash-discount option tedious, impractical and, in
most cases, cost-prohibitive. For example, retailers must post the cash price second and label it
a discount from the non-cash price. Some operating rules prohibit discounts for payments other
than cash — even when using a PIN debit card, which withdraws funds directly from a cus-
tomer’s bank account and carries the lowest interchange fee.
FMI is trying to help members navigate these restrictions with a new best practices guide, “Cash
Costs Less: Offering Customers a Discount for Cash Payments at the Point of Sale.” To obtain
a copy, contact Jennifer Hatcher at 202.220.0734 or
Whether the DOJ investigations will lead to antitrust lawsuits is unknown, but the agency has a
long history of taking legal action to curb anti-competitive credit card company practices.

Numerous Countries Probing Credit Card Interchange Fee Issues
Visa’s 10-K statement listed 19 countries in which central banks and regulatory authorities are
investigating interchange fee issues and acting to resolve them:
Australia                 Hungary                   Portugal                   Sweden
Brazil                    Mexico                    Romania                    Switzerland
Colombia                  New Zealand               Singapore                  United Kingdom
Germany                   Norway                    South Africa               Venezuela
Honduras                  Poland                    Spain
The company also cited the current investigation by the European Commission. A link to Visa’s
10-K filing is posted at

About media coverage, contact Bill Greer at 202.220.0667 or
About legislative action, contact Jennifer Hatcher at 202.220.0734 or
Visit for the latest news about FMI’s campaign for cost-based and
transparent interchange fees.

To top