Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Pizza Hut, Wendy’s operator challenges Visa, MasterCard interchange fees, (Aug 14, 2015)

By Greg Hammond, J.D.

NPC International, Inc., the largest U.S. franchisee of Pizza Hut and a significant franchisee of Wendy’s, has joined the growing list of restaurants and merchants who are claiming that Visa, Inc. and MasterCard, Inc. are engaging in a price fixing conspiracy, causing merchants to pay excessive interchange fees (NPC International, Inc. v. Visa, Inc., August 13, 2015).

According to the complaint, filed in Brooklyn, New York, Visa and MasterCard implemented, managed, and coordinated a combination and conspiracy in unreasonable restraint of trade, in violation of the Sherman Act and state antitrust and unfair competition laws, by adopting nearly identical rules that eliminated competition among Visa and MasterCard member banks for merchant acceptance of credit and debit cards.

The primary rules that made up the competitive restraints were: the setting of “default” interchange fees; the “Honor All Cards Rules;” the “No-Multi-Issuer Rules;” “the All-Outlets Rules;” the “No Discount Rules;” and the “No Surcharge Rules.” According to NPC, these rules precluded merchants from gaining the benefits of competition as to the terms for acceptance of cards of particular issuing banks, and precluded card issuers from competing for merchant acceptance of their cards. The setting of “default” interchange fees also fixed the price for card acceptance at a supra-competitive level. Consequently, NPC alleges that it paid significantly higher costs to accept Visa and MasterCard branded credit and debit cards than it would have if the member banks issuing those cards had actually competed for merchant acceptance.

The nine-count complaint claims that Visa and MasterCard violated: Section 1 of the Sherman Act through their competitive restraints governing credit and debit cards; Section 2 of the Sherman Act through their monopolization of the market for merchant acceptance of credit cards; and Section 2 of the Sherman Act though their monopolization of the sub-market for merchant acceptance of Visa and MasterCard credit cards. The complaint also asserts violations of state antitrust and unfair competition laws, including the states of Florida, Iowa, Kansas, Minnesota, Mississippi, North Carolina, North Dakota, Oregon, South Dakota, Tennessee, and West Virginia.

NPC seeks actual damages, treble damages, attorney fees, costs of suit, and pre- and post-judgment interest. The company also seeks injunctive relief, prohibiting Visa and MasterCard from enforcing the “Honor All Cards” and “No-Multi-Issuer” rules as to both credit and debit cards.

The case number is 15-CV-4734.

Attorneys: Matthew P. McCahill (Kaplan Fox & Kilsheimer LLP) for NPC International, Inc.

Companies: NPC International, Inc.; Visa, Inc.; Visa U.S.A., Inc.; Visa International Service Association; MasterCard Inc.; MasterCard International Inc.

News: Antitrust NewYorkNews