Retailers Sue Visa for Price-Fixing

NEW YORK – A group of large supermarket and drugstore chains has sued Visa International (search) and its Visa USA (search) unit, accusing the credit card association of price fixing, restricting competition, and keep companies from negotiating lower rates.

In the lawsuit, filed late Thursday in U.S. District Court for the Southern District of New York, the retailers contended Visa's restrictions allowed it to extract fees that were "artificially inflated."

Visa is on a "never-ending quest to extract higher revenue" from retailers through "unchallenged market power," the retailers said. The stakes are significant because consumers are increasing their reliance on cards, even on small purchases.

San Francisco-based Visa did not immediately return calls seeking comment.

Plaintiffs included grocers Albertsons Inc. (ABS), Kroger Co. (KR), Safeway Inc. (SWY)and Ahold USA Inc., a unit of Netherlands-based Ahold NV (search), as well as drugstores Walgreen Co. (WAG), and Jean Coutu Group Inc.'s (search) Eckerd Corp. and Maxi Drug Inc.

The retailers are seeking an injunction and triple damages from Jan. 1, 2004 to the present. The 31-page lawsuit does not name Visa's main rival, MasterCard International (search), or Visa's card-issuing banks.

The lawsuit accused Visa of unlawfully setting interchange fees charged to merchants each time customers use Visa credit card for purchases, and imposing rules that prevented them from negotiating lower fees.

Retail merchants pay interchange fees to issuing banks to receive payments for transactions involving the banks' cards.

The lawsuit said that freed of Visa's restrictions, retailers could negotiate with individual banks and decide whether to accept certain cards, or tack on a surcharge for accepting some cards.

Earlier this week, Visa USA named John Coghlan as its new chief executive, replacing Carl Pascarella, who is retiring.