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NGA Provides Testimony At Swipe Fee Litigation Fairness Hearing

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The National Grocers Association (NGA) provided testimony Thursday at a fairness hearing before U.S. District Judge John Gleeson in Brooklyn, N.Y., in the case “In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.” The purpose of the hearing was to determine whether to approve the motion for final approval of the settlement. After hearing from all parties, Gleeson took the presentations under advisement without indicating when a decision will be made.

“Today NGA had an opportunity to express our strong opposition to the proposed settlement agreement before Judge Gleeson,” said Peter J. Larkin, president and CEO of NGA. “When NGA and other named plaintiffs brought this case nearly eight years ago the purpose was to bring about true reforms to the anticompetitive credit card market place that exists. NGA has opted out of any monetary settlement in this case as the proposed settlement fails to provide meaningful reform that will eliminate anti-competitive setting of credit card interchange fees, while also failing to reform operating rules that restrict merchants’ freedom to operate their businesses.”

Thomas Wenning, NGA’s EVP and general counsel, also addressed the court by making the following statement to express NGA’s opposition:

“Eight years ago NGA and three of its members, Coborn’s Inc., D’Agostino Supermarkets and Affiliated Foods Midwest, became class plaintiffs in this litigation. NGA elected to participate to eliminate the collusive setting of interchange fees by Visa, MasterCard and other defendants, and the enforcement of anti-competitive rules that unfairly restrict merchants’ freedom to operate their businesses.

“The NGA board voted unanimously to oppose the settlement agreement after thorough consideration and review, because it does not provide meaningful relief from the anticompetitive market power exercised by Visa and MasterCard, and actually makes matters worse for merchants and consumers. In fact, the credit card companies stated goal is to end future antitrust challenges to their anti-competitive and monopolistic practices.

“Regarding surcharging, unlike the airline example given this morning, the restricted form it takes in the settlement agreement is useless in a competitive industry like the grocery industry. Rather than simply repealing the no surcharge rule and letting the marketplace work, the settlement agreement creates protectionism for Visa and MasterCard and creates an unlevel playing field for merchants.

“For grocers operating in 11 states, surcharging is prohibited and is of no value. Another 20 states have considered legislation, signaling a growing movement to ban the practice.

“In summary, NGA and its members could not accept such a one-sided proposed settlement agreement that not only preserves the status quo, but increases the market power of credit card companies and banks for all time and puts handcuffs on the operational practices of merchants and their rights in the future. Opposing the proposed settlement is a matter of substance, not political rhetoric.

“The settlement is a bad deal for merchants and should be rejected. Thank you for considering the views of the nation’s independent retail grocers.”

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