Apple, Visa and Mastercard win dismissal of merchant antitrust lawsuit over payment fees

By Mike Scarcella

July 10 (Reuters) - Apple AAPL.O, Visa V.N and Mastercard MA.N have persuaded a U.S. judge to dismiss a lawsuit accusing them of conspiring to suppress competition in the payments network market and causing merchants to pay inflated transaction fees.

U.S. District Judge David Dugan in Illinois ruled on Wednesday that the merchants had not provided enough evidence to support their claim that Apple illegally declined to launch a competing payment network to rival Visa and Mastercard.

Dugan found that the plaintiffs offered only “a slew of circumstantial allegations,” but allowed them to amend their lawsuit to strengthen their claims.

Mastercard and attorneys for the plaintiffs declined to comment. Apple had no immediate comment, and Visa did not immediately respond to a request for one.

The defendants had denied any wrongdoing and urged Dugan to dismiss the lawsuit.

Apple launched its Apple Pay feature in 2014 as a mobile payment service allowing iPhone users to store payment card information and make purchases at businesses where the platform is accepted.

The lawsuit, filed by beverage retailer Mirage Wine & Spirits and other businesses, was brought on behalf of a proposed class of thousands of merchants.

The lawsuit alleged Visa and Mastercard paid Apple what amounted to a “very large and ongoing cash bribe” of hundreds of millions of dollars a year to keep it from competing with them.

The alleged agreements drove up fees that merchants pay on transactions, the lawsuit said.

Visa and Mastercard had disputed claims of making payments to Apple, and had argued that the iPhone maker in its agreements with the networks expressly preserved a right to compete with them.

Apple argued that the complaint failed to show that the company had any plan to enter the payments network market and compete with Visa or Mastercard.

In his ruling, Dugan said the merchants’ allegations “completely ignore the difficulties, costs and time, risks, and potential for failure associated with such an endeavor.”

The case is Mirage Wine & Spirits Inc et al v. Apple et al, U.S. District Court for the Southern District of Illinois, No. 3:23-cv-03942-DWD.

For plaintiffs: Robin van der Meulen of Scott + Scott; K. Craig Wildfang of Robins Kaplan; Christopher Burke of Burke LLP; Amelia Burroughs of Burroughs Law Group; Michelle Looby of Gustafson Gluek; and Stephen Tillery of Korein Tillery

For Apple: Belinda Lee of Latham & Watkins

For Visa: Michael Shuster of Holwell Shuster & Goldberg, and Matthew Eisenstein of Arnold & Porter Kaye Scholer

For Mastercard: Brette Tannenbaum of Paul, Weiss, Rifkind, Wharton & Garrison

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