Discover Settles Anti-Trust Suit with Visa and MasterCard
It was reported on Monday by credit card giants Visa and MasterCard that they would pay Discover Financial Services Inc. (the parent company of Discover Card) a combined total of 2.75 billion dollars to settle anti-trust litigation brought against them.
The suit was scheduled to go to trial this month before the settlement was reached between the three parties. It was reported earlier this month that a tentative settlement was reached between the the two defendants and the plaintiff but the terms were not disclosed until yesterday.
MasterCard’s share will be $862.5 million while Visa will pay $1.89 billion. Visa is paying more because they have a larger share of the market as compared to MasterCard. This suit dates back to 2004 when Discover first alleged anit-trust violations. They were originally seeking $6 billion in damages.
At the heart of the lawsuit was Discover’s claim that Visa and MasterCard were putting pressure on banks to keep them from issuing competing cards from other credit card companies, thus violating anti-trust laws. The other credit card issuers being Discover and American Express.
American Express filed a similar suit seeking $2.25 billion in damages. That suit was settled out of court in 2007. American Express received a total of $1.8 billion. These figures show just how incredibly lucrative the credit card industry is. But we already knew that didn’t we?
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