Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Ill.: Merchants suffer dismissal of antitrust complaint against Apple, Visa, Mastercard, without prejudice, (Jul 10, 2025)

By Justin Marcus Smith, J.D.

The merchants essentially relied on conjecture that Apple could have lowered credit card processing fees by entering the market as a competitor to the Visa and Mastercard payment associations.

Merchants who complained that Apple unlawfully agreed to stay out of the credit-card processing market in exchange for “cash bribes” from incumbent payment processing associations could not proceed with their Sherman Act and Clayton Act claims against Apple and payment associations Visa and Mastercard (collectively, defendants), held the federal district court in East Saint Louis, Illinois. Attached to their motion to dismiss, the defendants presented evidence of payment platform agreements (PPAs) with terms that directly controverted the core allegations of the merchants’ amended complaint. On the face of the PPAs, the defendant card associations and Apple remained free to change or suspend PPA terms at any time. More specifically, Apple remained free to build its own payment processing network. The merchants’ circumstantial allegations were “too speculative” to save the Sherman Act Section 1 claim, and there were no allegations of high-level interfirm communications. In the alternative, the merchants did not have antitrust standing because their alleged injury of inflated fees passed on to them was too speculative and remote. That alleged injury depended on the conjectural success Apple would have had in building its own payment processing network, but for the PPAs. The court partly granted the defendants’ motion to dismiss the complaint insofar as it dismissed the complaint without prejudice, whereas the defendants had requested dismissal with prejudice (Mirage Wine + Spirit’s, Inc. v. Apple Inc., No. 3:23-cv-03942-DWD (S.D. Ill. July 9, 2025)).

Background. Mirage Wine + Spirit’s, Inc. and other merchants (collectively, the merchants) filed a putative class action lawsuit alleging that (1) Apple unlawfully agreed with the Visa, Mastercard, and Discover credit card associations that Apple would refrain from building its own competing payment network in exchange for transaction fees from consumer Apple Pay app purchases using the card associations’ existing transaction networks; and (2) Apple also agreed to not allow network bank-to-bank transactions by Apple Pay users.

The lawsuit did not name Discover or Amex as defendants, even though the merchants alleged they were part of the conspiracy. The merchants alleged that the growing popularity of the iPhone® placed commercial pressure on them and similarly situated merchants to accept Apple Pay, but the alleged conspiratorial agreements caused the merchants to be charged higher processing and service fees than otherwise would have been charged had Apple entered as a competitor in the payment card network services market.

The merchants claimed per se violations of the Sherman Act and Clayton Act on behalf of themselves and a class of merchants in the United States that accepted Apple Pay at the physical point of sale from December 14, 2019, to the present and who did not accept Visa or Mastercard Payment cards at any time between January 1, 2004, and January 25, 2019. The merchants sought monetary relief stemming from inflated fees stemming from the defendants’ “unlawful agreement to restrain trade.”

Apple, Visa, and Mastercard filed Fed. R. Civ. P. 12(b)(6) motions to dismiss the lawsuit. They also moved to stay discovery while the dismissal motions were pending. In October 2024, the court stayed discovery pending its disposition of the dismissal motions, but it ordered production of materials from other ongoing proceedings against Apple and the payment card companies while the dismissal motions remain pending. Most recently, the court turned its attention to the pending motions to dismiss and dismissing the entirety of the complaint, albeit without prejudice.

PPA evidence. The defendants made similar arguments that their payment platform agreements (PPAs) were simply vertical distribution agreements that undercut the allegations of per se unlawful horizontal market allocation agreements. They stressed the PPAs did not restrain Apple from having its own competing payment network, either using direct bank-to-bank transfers in Apple Pay, or by sharing its near field communication (NFC) technology with third-party application developers.

The court said it could consider the PPAs, as attached to the motions to dismiss, because the merchants’ amended class action complaint referenced the PPAs and the PPAs were central to its claims.

Association arguments. The Visa and Mastercard associations added that the merchants failed to allege any other direct evidence of an unlawful agreement or conspiracy or circumstantial evidence in the form of communications, meetings, or other interactions among the defendants. They contended the merchants only offered the conclusion that Apple somehow acted against self-interest in the way it built Apple Pay without turning it into a payment network, even though that would have an extremely expensive undertaking that might not have even made business sense. Moreover, the card issuing banks, not the defendant associations, paid the alleged fees or “cash bribes,” payments that might have been nothing more than ordinary compensation for access to the iPhone ecosystem.

Apple arguments. Apple, meanwhile, stated it never had an intent or an economic interest in creating its own payment network. All it ostensibly wanted to do was create digital doppelgängers of consumers’ existing payment cards for use on Apple mobile devices. Apple emphasized, and the merchants purportedly acknowledged, that merchant-bank acquirers, pursuant to Visa and Mastercard rules, pay interchange fees to payment-card issuers on a per-transaction basis before passing the costs associated with those interchange fees along to merchants like the plaintiffs. Apple also said the allegations about the passing-on of fees, i.e., that it was uniquely situated to create its own payment network which would have lowered credit processing fees across the market, were all part of a “highly speculative causal chain” with “uncertain” links.

Merchant arguments. In response, the merchants noted that the United States Department of Justice, which is currently suing Visa for monopolization, has alleged that Apple engaged in discussions with a large debit issuer about building a payment network without Visa or Mastercard involvement. The merchants argued it was not necessary to assess the veracity of that allegation, which was subject to judicial notice, at this stage. The merchants also stressed the allegation that Apple branched into the payments industry in the early 2010s by filing several payments-related patents and acquiring payment startups, resulting in Apple Pay. Apple also allegedly worked with PayPal, which might have led to automated clearinghouse (ACH) transfers on Apple Pay and bank account transfers that would have disintermediated Visa and Mastercard, but “suddenly dropped [that] planned partnership” at Visa and Mastercard request. Without the partnership, Apple limited Apple Pay to a pass-through mobile wallet that merely facilitated payments through the defendant associations “entrenched networks.” The merchants insisted that the PPAs were per se unlawful market allocation agreements that gave Apple a contract right worth hundreds of millions annually, whereas, without the PPAs, Apple had an economic interest to create a competitor payment network. The merchants argued contemporaneous actions were circumstantial evidence of the per se unlawful horizontal market allocation agreements which were later reduced, in August 2014, to the written, executed PPAs on materially similar terms.

PPAs dispositive. After conducting an independent review of the PPAs, including the provisions the parties specifically cited, the court said the express terms appeared to confirm the defendant associations’ arguments:

• Visa and Mastercard merely billed and collected fees payable by payment-card issuers;

• Apple reserved the “unilateral right” to change any aspect of Apple Pay at any time;

• Apple retained the right to launch a competing payment network;

• Visa and Mastercard retained the right to suspend aspects of their relationships with Apple;

• non-exclusivity provisions kept the defendant associations “largely unrestricted” in other respects; and,

• the PPAs were silent about bank-to-bank transfers and competitor access to Apple Wallet and NFC technology;

In short, the court agreed with the defendant associations that the PPAs contradicted the allegations of per se horizontal market allocation agreements. The court therefore concluded it must grant the defendant associations’ motions to dismiss on this basis.

Circumstantial allegations. Moreover, the circumstantial allegations were “too speculative” to save the Sherman Act Section 1 claim. The merchants may have been correct that Apple was in a unique position to disintermediate Visa and Mastercard, but those allegations completely ignored the scale and scope of such a project. The idea that it would have succeeded in placing downward pricing pressure on credit card processing fees was too speculative and too conclusory to reflect a common motive to conspire. Notably, the merchants did not allege any evidence of high-level interfirm communications.

Despite European Commission findings about Apple’s NFC technology, the PPAs were silent on competitor access to Apple Wallet and NFC technology, and the parties retained latitude to change or suspend the PPAs and to work with third parties like PayPal. The court accordingly found it must also grant dismissal on this basis.

Standing. The court additionally found, in the alternative, that the merchants lacked antitrust standing. They could not bring the action because their alleged injury about the passing-on of inflated fees was “too indirect, remote, and speculative to support antitrust standing.”

The Case is No. 3:23-cv-03942-DWD.

Judge: Dugan, D.

Attorneys: Caitlin E. Keiper (Robins Kaplan LLP) for Mirage Wine + Spirits, Inc. Aaron Chiu (Latham & Watkins LLP) for Apple Inc.

Companies: Mirage Wine + Spirits, Inc.; Apple Inc.

Cases: Antitrust IllinoisNews GCNNews