NCGA Objects to Proposed Settlement “In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation”

IOWA CITY, IA (February 26, 2013) – Seven and a half years ago on behalf of its retail co-ops, National Cooperative Grocers Association (NCGA) elected to become a plaintiff in a class action suit alleging unfair practices by credit card and debit card issuers, including charging billions in noncompetitive “swipe” or “interchange” fees to retailers across the country. NCGA was joined in this litigation by eighteen other organizations, including five other national trade associations.

In August 2012, NCGA’s Board voted to object to the proposed settlement. Furthermore, NCGA encourages its member and associate co-ops to opt out of the settlement and voice their opposition to an agreement that preserves unfair practices and increases the leverage credit card companies and banks hold over merchants from all sectors.

“NCGA has no intention of supporting a settlement that keeps the status quo in place. This settlement prevents any progress towards toward a system that promotes transparency and consumer fairness,” said Robynn Shrader, chief executive officer of NCGA. “And it allows credit card issuers and credit card networks to continue to exploit retailers and consumers without risk of future repercussion. It’s simply unacceptable.”

NCGA and others oppose the proposed settlement because it does not achieve the fundamental objective of restructuring and reforming anticompetitive credit card swipe fees and payment rules, and will only make matters worse for consumers and merchants. From a legal perspective, NCGA and others strongly believe the proposed settlement does not meet the standard for being fair, adequate and reasonable. It is unfair because it violates due process. It is inadequate and unreasonable because of the illusory nature of the relief and overly broad reach of the release from future antitrust violations.

NCGA is among ten of the nineteen original named class plaintiffs (Affiliated Foods Midwest, Coborn’s, Inc., D’Agostino Supermarkets, Jetro Holdings, Inc. and Jetro Cash & Carry Enterprises, National Association of Convenience Stores (NACS), NATSO, National Community Pharmacists Association (NCPA), National Grocers Association (NGA), and National Restaurant Association (NRA)) as well as a growing number of other members of the merchant class which oppose the settlement.

Settlement Background

For years, retailers have been forced to pay non-competitive fees, which average about 2 percent of the price of a purchase. Over the last seven years, credit card issuers have charged retailers $350 billion in fees. The proposed settlement includes a $6.05 billion payment for alleged past damages as well as a temporary reduction in swipe fees for 8 months that is valued at $1.2 billion.

The proposed settlement would allow for individual retailers to charge fees directly to consumers who wish to use credit cards or debit cards, a scenario NCGA rejects as a way to pass the burden to retailers of collecting non-competitive fees from consumers. The practice of surcharging is an inadequate solution to the broader problem of swipe fees. The settlement also does not limit credit card issuers and credit card networks from hiking related fees in the future, and if accepted, would protect credit issuers from future lawsuits. NCGA remains committed to achieving reform of the anticompetitive interchange fee system and rules, to provide competition, transparency, and fairness in the swipe fee marketplace.

About NCGA

National Cooperative Grocers Association (NCGA), founded in 1999, is a business services cooperative for retail food co-ops located throughout the United States. NCGA helps unify food co-ops in order to optimize operational and marketing resources, strengthen purchasing power, and ultimately offer more value to natural food co-op owners and shoppers everywhere. Our 134 member and associate co-ops operate 171 storefronts in 36 states with combined annual sales over $1.5 billion. NCGA is a winner of the dotCoop Global Awards for Cooperative Excellence in recognition of the application of cooperative values and principles to drive cooperative and business success. In 2012, NCGA became a Certified B Corporation, a rigorous certification that recognizes business standards of social and environmental performance, accountability and transparency. For a map of NCGA member and associate co-ops, visit www.ncga.coop. To learn more about co-ops, visit www.strongertogether.coop or www.go.coop.(new window)”:http:/www.go.coop