Apple, Visa, Mastercard sued for conspiring to thwart payment card competition

Apple, Visa and Mastercard have been hit with a new proposed class action that accuses them of conspiring to thwart competition for point-of-sale payment card network services, causing merchants to pay artificially higher fees for credit and debit transactions, reports Reuters.

In a complaint filed in East St. Louis, Illinois, federal court on Thursday, beverage retailer Mirage Wine & Spirits said Apple struck unlawful agreements with Visa and Mastercard to refrain from competing with the two credit card companies.

From the complaint: Rather than compete in the U.S. POS Payment Card Network Services market, however, Apple and the Entrenched Networks agreed to allocate that market. Apple reached agreements with Visa and then with Mastercard not to use the iPhone to establish its own independent POS Transaction Payment network. Instead, Apple, Visa, and Mastercard agreed to run Apple Pay transactions over the Entrenched Networks’ POS Transaction Payment networks. Upon information and belief, Apple agreed with the Entrenched Networks to protect their market division from competition by blocking third parties from accessing certain hardware in the iPhone, namely the iPhone’s “Secure Element,”1 which those third parties could have used to establish mobile-based payment solutions that competed with the Entrenched Networks. Upon information and belief Apple later reached similar agreements with American Express and Discover.

The lawsuit is seeking a class action status, and is brought on behalf of a proposed class of “at least many thousands” of merchants. It also seeks triple damages under U.S. antitrust law.