Visa’s CEO on Tuesday expressed dismay that a federal judge rejected a negotiated settlement of a two-decade-old lawsuit lodged against the company by merchants, and suggested the case could go to trial before a new agreement is reached.
Visa and Mastercard reached the landmark class action settlement in March, promising to lower the fees they charge merchants for credit card transactions and cap the interchange fees for a period of five years. But the injunctive relief settlement was rejected by U.S. District Judge Margo Brodie last month.
“We are, of course, disappointed with this decision,” Visa CEO Ryan McInerney said during a call with analysts Tuesday to discuss the company’s fiscal third-quarter results. “We believe that the prior settlement provided meaningful relief to all merchants, and we will continue to work towards another settlement.”
Later in the call, the CEO responded to an analyst question about what might follow in the wake of the collapsed litigation agreement. McInerney reiterated his disappointment with Brodie’s decision.
“We strongly disagree with the judge's decision,” he said during the call. “We believe the settlement was fair. We believe the settlement provided meaningful relief to all merchants.”
Lawyers for Visa’s merchant adversaries in the case argued the same before the judge last month. They contended the settlement would provide at least $29.79 billion in savings over five years to merchants as a result of the lowered fees and temporary cap, according to a their press release at the time. But the judge disagreed with the overall settlement outcome, saying in her decision that it failed to treat merchants “equitably” relative to each other.
McInerney said during the call Tuesday that it’s too early to speculate about a revised settlement, and took issue with the judge’s logic.
“The decision failed to take into consideration a number of things, especially the complex, multi-sided ecosystem that we operate in,” the CEO said, also pointing to “the complicated roles that many different players in the ecosystem deliver.”
“Having said that, we're pursuing a revised settlement,” he added. The CEO also reminded analysts that a settlement wouldn’t necessarily need to arrive before the case goes to trial.
“I would ask everybody to keep in mind, you know, a settlement can occur at any point before, during or even after the trial,” McInerney said. “So, just keep that in mind as the process plays out.”
For now, there hasn’t been an update from lawyers for the plaintiffs or defendants on the status of revived negotiations for a settlement.
The San Francisco-based company reported third-quarter revenue, for the three months ended on June 30, climbed 10% to $8.9 billion over the year-earlier quarter, driving up net income 17% to $4.9 billion, according to the earnings press release.
