SANTA FE, N.M. (CN) - Visa and Mastercard fix prices they charge merchants and collude to restrict competition, New Mexico claims in antitrust conspiracy lawsuit.
The lawsuit, filed Christmas Eve in Santa Fe County Court, takes aim at interchange fees, which merchants pay every time they accept a purchase by credit or debit card. These fees average nearly 2 of the purchase and are not open to negotiation.
Visa and MasterCard dominate the market, accounting for nearly 85 percent of global payments worldwide in 2010.
Merchants pay $48 billion a year in interchange fees, in many cases the second largest expense after payroll. These fees inflate the prices of all items sold, as merchants pass on the expense by raising prices of all their items, the state says in the 47-page lawsuit.
Visa and MasterCard use their market power to impose restrictive rules to prevent merchants from accepting or promoting other cards.
Visa and MasterCard have faced multiple lawsuits for this anticompetitive behavior. One of them resulted in a $7.25 billion settlement, which, however, was criticized for its "lack of injunctive relief and potentially illusory compensation to merchants," New Mexico says. The credit card companies appealed it to the 2nd Circuit.
New Mexico excluded itself from that case. It brings this lawsuit under the New Mexico Antitrust Act, for "illegal setting and charging of inflated interchange fees," for "other restrictive rules having anticompetitive effects," and other economic harm.
It seeks declaratory judgment, an injunction, disgorgement and treble damages for antitrust violations, civil conspiracy, unfair trade, unfair competition and unjust enrichment.
The suit is brought by Gary K. King, New Mexico Attorney General.