NEW YORK (
) -- A May 24 ruling against
) by the European Union's General Court isn't expected to impact earnings for the credit card company, though it may strengthen the hand of plaintiffs in
a multi-billion dollar U.S. antitrust case pending against Mastercard, Visa (
) and several giant banks.
On May 24, the EU General Court upheld a 2007 decision that Mastercard's cross-border transaction "interchange fees"--charged to retailers every time a card is swiped--were excessive.
While the ruling was "not a real surprise," it could impact future EU cases involving Mastercard, according to a May 24 report by Deutsche Bank analyst Brian Keane.
It would be more significant, however, if the EU decision impacted a civil case pending in the U.S. Eastern District of New York. That case, a lawsuit against MasterCard,
), and 13 large banks, including
Bank of America
) is expected to settle for a few billion dollars at the very least.
Critical to both cases is whether Mastercard's 2006 initial public offering protects it from accusations it illegally conspired with banks to set interchange fees. Prior to the offering, Mastercard was jointly owned by several large banks, including Bank of America, Citigroup,
The EU court ruled a conspiracy existed between Mastercard and several large European banks, including
Royal Bank of Scotland
) despite Mastercard's IPO.
In the U.S. case, the defendants are asking the court to bar any antitrust claims against MasterCard after its 2006 IPO and against Visa after its 2008 IPO.
That motion by the defendants will be defeated, however, if the plaintiffs can show "there are some facts out there that demonstrate that, notwithstanding the IPOs
MasterCard spokesman Jim Issokson, however, argues "there is no connection" between the U.S. and European cases.
But Henry Polmer, an attorney who has represented merchants, card companies and card-issuing banks, argues the cases have a lot in common.
"One of the big questions they have in common is whether or not MasterCard was essentially acting as part of a conspiracy or in a coordinated effort with others and that together they had market power and they were essentially controlling and undermining competition," Polmer says. He argues the EU decision "doesn't bind the court in the United States, but will probably have some persuasive influence."
If MasterCard and Visa are deemed to be conspiracies even after their IPOs, it opens them up to billions more in potential damages, according to attorney Cantor.
Written by Dan Freed in New York
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