Apple, Visa and Mastercard secure dismissal of merchant antitrust case

Apple, Visa, and Mastercard have secured a legal victory after a US judge dismissed a lawsuit alleging that the three companies colluded to suppress competition within the payments network market, resulting in merchants paying inflated transaction fees.

Dismissal of merchant antitrust case

The case, brought by beverage retailer Mirage Wine & Spirits and other businesses on behalf of a proposed class of thousands of merchants, accused Visa and Mastercard of paying Apple what the plaintiffs described as a “very large and ongoing cash bribe” amounting to hundreds of millions of dollars annually.

According to the claim, these payments were designed to dissuade Apple from launching its own rival payment network, thereby protecting Visa and Mastercard’s dominant market positions and keeping merchant fees high.

However, U.S. District Judge David Dugan in Illinois ruled this week that the plaintiffs had failed to present sufficient evidence to support their allegations.

In his decision, Dugan described the lawsuit as containing merely “a slew of circumstantial allegations” and concluded that the merchants “completely ignore the difficulties, costs and time, risks, and potential for failure associated with such an endeavour” as Apple launching a new payments network.

Despite the dismissal, the plaintiffs have been granted permission to amend their complaint to strengthen their case.

Apple argued throughout that it never had plans to enter the payments network market directly, while Visa and Mastercard denied making any payments to Apple to prevent such competition.

Their agreements, Visa and Mastercard said, expressly preserved Apple’s right to compete.

The lawsuit centred on Apple Pay, launched in 2014, which enables iPhone users to store payment card details and make in-store and online purchases through participating merchants.

The plaintiffs contended that, absent alleged collusion, Apple could have developed a payments network to compete directly with card schemes, potentially lowering merchant fees.

Neither Apple nor Visa commented on the ruling. Mastercard declined to comment.