NEW YORK — Executives from the National Grocers Association testified in court here Thursday to a proposed settlement agreement concerning interchange fees, calling the agreement “a bad deal for merchants [that] should be rejected."

According to Thomas Wenning, NGA executive vice president and general counsel, "NGA and its members could not accept such a one-sided proposed settlement agreement that not only preserves the status quo but also 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.”


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Wenning made his remarks before U.S. District Judge John Gleeson in Brooklyn, who will determine whether to grant final approval to a motion for final approval of the interchange fees settlement that was announced more than a year ago. As proposed by the credit card companies and banks, the $7.25-billion settlement would prohibit those who accept payment from filing future lawsuits. NGA is one of several trade associations who, along with various retailers, opted out of the settlement and filed a new lawsuit in June.

In his testimony Wenning said NGA voted unanimously to oppose the settlement agreement “because it does not provide meaningful relief from the anti-competitive 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.”

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When NGA and three of its members — Coborns, D'Agostino Supermarkets and Affiliated Foods Midwest — became class plaintiffs in the litigation eight years ago, Wenning noted, NGA’s decision to participate was prompted by its desire “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.

"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 uneven 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.”

Peter J. Larkin, president and chief executive officer of NGA, said NGA opted out of any monetary settlement in the case “[because] 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."

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