July 15, 2005

Retailers sue Visa, claiming price fixing

NEW YORK (Reuters) - A group of large supermarket and
drugstore chains has sued Visa International and its Visa USA
unit, accusing the credit card association of price fixing,
restricting competition, and keep companies from negotiating
lower rates.

In the lawsuit, filed late Thursday in U.S. District Court
for the Southern District of New York, the retailers contended
Visa's restrictions allowed it to extract fees that were
"artificially inflated."

Visa is on a "never-ending quest to extract higher revenue"
from retailers through "unchallenged market power," the
retailers said. The stakes are significant because consumers
are increasing their reliance on cards, even on small

San Francisco-based Visa did not immediately return calls
seeking comment.

Plaintiffs included grocers Albertsons Inc. , Kroger
Co. , Safeway Inc. and Ahold USA Inc., a unit of
Netherlands-based Ahold NV , as well as drugstores
Walgreen Co. WAG.N>, and Jean Coutu Group Inc.'s Eckerd Corp. and Maxi Drug Inc.

The retailers are seeking an injunction and triple damages
from Jan. 1, 2004 to the present. The 31-page lawsuit does not
name Visa's main rival, MasterCard International, or Visa's
card-issuing banks.

The lawsuit accused Visa of unlawfully setting interchange
fees charged to merchants each time customers use Visa credit
card for purchases, and imposing rules that prevented them from
negotiating lower fees.

Retail merchants pay interchange fees to issuing banks to
receive payments for transactions involving the banks' cards.

The lawsuit said that freed of Visa's restrictions,
retailers could negotiate with individual banks and decide
whether to accept certain cards, or tack on a surcharge for
accepting some cards.

Earlier this week, Visa USA named John Coghlan as its new
chief executive, replacing Carl Pascarella, who is retiring.