Judge Refuses Visa’s Request to Escape Pornhub-Related Lawsuit

The litigation stems from a roughly $6 billion settlement in 2012. The initial settlement included an agreement by Visa and Mastercard to reduce the charge to process transactions for eight months. But lawmakers, including Senator Richard J. Durbin of Illinois, argued that the concessions the credit card companies offered were insufficient. Certain large retailers, like Walmart, opted out of the settlement, hoping to get better terms themselves, as Amazon did earlier this year. That means the lawsuit could be Disney’s way of pushing for money, better terms with the credit card companies or both.

Disney claims that Visa and Mastercard used corporate maneuvering to shroud their hold on the industry. When Visa and Mastercard were private companies, they were backed by thousands of financial institutions, including such big banks as JPMorgan Chase, that were recipients of interchange fees. When the payment processors went public, in 2006 and 2008, it created a perception of separation between them and the banks, which some analysts said was aimed at mitigating regulatory scrutiny. “If it’s a single company, they hoped they would not be viewed as a cartel of banks,” Harry First, a law professor specializing in antitrust at N.Y.U., told DealBook. “A single company can set its own price and do what it wants.” (The strategy is similar to one that the N.F.L. used unsuccessfully in arguments before the Supreme Court years ago.)

While the corporate structure changed, Disney argues in the suit, the credit card companies’ behavior did not. Disney says that the beneficial fees that Visa and Mastercard offered the banks remain, and that the two companies dominate the industry, driving up costs. “The debit card market is dominated by Visa and Mastercard,” the suit notes. “Combined, Visa and Mastercard comprised about 75 percent of all debit purchase volume in 2004 and comprise over 80 percent today.” Fees continue to be a focus of legislative action, as well. Senator Durbin and a colleague plan to propose a new bill to target them.

“We do not anticipate litigating this and expect a resolution could be announced in the near term,” a spokesman for Mastercard told DealBook. Visa declined to comment on the record.

“It is surprising to me on some level that we saw all that surge of buying activity and we weren’t collectively able to see that it was going to end at some point.”

— J.D. Daunt, chief commercial officer at Liquidity Services, on the boom times for liquidators as retailers rush to get rid of goods that were in high demand just a year ago.

Article source: https://www.nytimes.com/2022/08/01/business/dealbook/pornhub-visa-mastercard-disney.html