Visa, Mastercard $30 Billion Antitrust Settlement Likely to Be Rejected by Judge

In a major disruption to the anticipated resolution of a long-standing legal feud, U.S. District Judge Margo Brodie in Brooklyn has indicated that she is inclined to reject Visa’s and Mastercard’s $30 billion antitrust settlement aimed at curbing merchant credit and debit card fees. This decision, rooted in sentiments shared at a recent hearing, could significantly impact traders and investors who have been monitoring the progress of these financial giants.

Both Visa (NYSE: V) and Mastercard (NYSE: MA) expressed their disappointment, having previously deemed the settlement a fair and appropriate resolution for a lawsuit that has dragged on for nearly two decades. The companies had touted the settlement, announced on March 26, as a substantial step towards resolving grievances for businesses, particularly the small ones that makeup over 90% of the entities involved in the litigation.

The opposition, however, was notable. The National Retail Federation, among the objectors, lambasted the agreement as "manifestly insufficient," arguing that the supposed benefits would be inadequate and short-lived, effectively allowing Visa and Mastercard to continue setting high swipe fees and imposing extensive restrictions on future claims. The proposed reduction in swipe fees by 0.04 percentage points over three years, along with five-year rate caps and the removal of anti-steering provisions, was seen as too little to address the larger issues.

With swipe fees topping $172 billion in 2023 and showing a steep rise over the past decade, retailers, grocers, convenience stores, and gas stations, represented by the Merchants Payments Coalition, have long sought relief from what they view as exorbitant and unfair interchange fees. The coalition insists that Visa and Mastercard's practices have been a financial burden on businesses, limiting their ability to steer consumers toward cheaper payment methods.

Judge Brodie’s forthcoming opinion will provide detailed reasoning for her anticipated decision, leaving financial analysts and stakeholders in suspense. Should the settlement fall through, it would prolong the uncertainty surrounding Visa and Mastercard's legal troubles, potentially affecting their market performance and regulatory outlook.

For stock traders, this development underscores the importance of staying informed about legal and regulatory challenges that major financial entities face. The performance of Visa (NYSE: V) and Mastercard (NYSE: MA) on the stock exchange could be notably impacted by this decision, with ripple effects likely felt across the market.