Judge Jones Narrows Scope of Discover Lawsuit Against MasterCard

Finds No Conspiracy Between MasterCard and Visa
Purchase, NY. - MasterCard Worldwide said today it is pleased that Judge Barbara S. Jones narrowed the scope of Discover’s antitrust case against MasterCard by granting certain aspects of MasterCard’s summary judgment motion. In particular, Jones found that despite Discover’s assertions, there is no evidence of a conspiracy between MasterCard and Visa. She also dismissed Discover’s debit-related claims against MasterCard.

In dismissing Discover’s claims of an inter-association conspiracy between MasterCard and Visa, the court’s decision recognizes the intense competition between MasterCard and Visa, which benefits consumers in the form of innovative products and programs. Further, Judge Jones limited the scope of the trial by dismissing Discover’s debit-related claims against MasterCard. In granting MasterCard’s motion, the Court recognized that Discover failed to establish that MasterCard’s Competitive Programs Policy (CPP) somehow excluded Discover from offering debit cards. This is not surprising since, the CPP only applied to credit and charge cards, not debit cards.

MasterCard said it is disappointed that the Court granted aspects of Discover’s summary judgment motion seeking to apply collateral estoppel in its claims against MasterCard, but pleased it rejected Discover’s attempt to obtain broader findings. Collateral estoppel is the application of certain findings in one lawsuit to a subsequent one.

However, in no way does Judge Jones’ ruling change the fact that Discover will have to establish that MasterCard and Visa, rather than its own business decisions, caused the damages it alleges. The jury will be able to fully evaluate all evidence concerning Discover’s damages claims, and MasterCard looks forward to demonstrating the weaknesses of those claims in court. For example, public results of Discover’s business performance after the CPP was withdrawn show that Discover has not seen any increase in its overall percentage of the credit card volume share from third-party issuance. This real world evidence highlights the weakness of Discover’s claim that the CPP damaged Discover by preventing Discover from entering into third-party issuing relationships. Indeed, the most recent results show that Discover’s overall credit card volume share—including both Discover-issued and bank-issued Discover cards—actually declined from 5.46% in 2006 to 5.33% in 2007.

A further demonstration of the weakness of Discover’s damages claim is the testimony of Discover’s own executives, who had testified before and during the DOJ case that the repeal of the CPP would hurt their company, and create a situation where Discover would not be able to build volume by attracting third-party issuers.