Visa 2011 Annual Report Download - page 130

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2011
(in millions, except as noted)
33.3333% and a Visa portion at 66.6667%. The Visa portion of a settlement or judgment covered by the omnibus agreement would be allocated in accordance
with specified provisions of the Company's retrospective responsibility plan. The litigation provision on the consolidated statements of operations is not
impacted by the execution of the omnibus agreement.
The parties filed motions for summary judgment on a number of issues on February 11, 2011. Visa, jointly with other defendants, moved for summary
judgment against the claims in the Supplemental Complaint and the Second Consolidated Amended Class Action Complaint. Visa and other defendants also
moved for summary judgment against the claims in the individual plaintiffs' complaints. The class plaintiffs sought summary judgment on all of their intra-
network damages claims under Section 1 of the Sherman Act in the Second Consolidated Amended Class Action Complaint, including by arguing that Visa's
post-IPO conduct constitutes a continuing conspiracy. Finally, the individual plaintiffs moved for partial summary judgment on their claims that
(i) agreements by banks to enforce certain Visa rules are per se unlawful under Section 1 of the Sherman Act, and (ii) Visa's imposition of those rules post-
IPO constitutes a continuing conspiracy under Section 1 of the Sherman Act.
The parties have exchanged expert reports and taken expert discovery. The court asked the parties to identify any objections to a trial date of
September 12, 2012, and no party has objected to that date.
The parties' efforts to reach a mediated resolution of the litigation continue, though substantial hurdles exist. In particular, plaintiffs' confidential
settlement demands to Visa have included unacceptable changes to Visa's business practices and unacceptable financial terms. Under generally accepted
accounting principles, the Company believes some loss is reasonably possible, but not probable and reasonably estimable. Many material uncertainties exist,
including, among other things, the mixed progress in settlement negotiations and numerous motions pending before the court. The current uncommitted
balance of the covered litigation escrow account—$2.7 billion—is consistent with the Company's estimate of its share of a lower end of a negotiated
settlement for the entire matter. The Company will continue to consider and reevaluate this estimate in light of the substantial uncertainties and mediation
obstacles that persist, including the unacceptable changes to our business practices demanded by plaintiffs. We are unable to estimate a potential loss or range
of loss, if any, at trial if a negotiated resolution of the matter cannot be reached.
Other Litigation
In re Visa Check/MasterMoney Antitrust Litigation. Beginning in October 1996, several antitrust class action lawsuits were brought by U.S. merchants
against Visa U.S.A. and MasterCard. The suits were later consolidated in the U.S. District Court for the Eastern District of New York, In re Visa Check/
MasterMoney Antitrust Litigation. Among other claims, the plaintiffs alleged that Visa U.S.A.'s "Honor All Cards" rule, which required merchants that
accepted Visa cards to accept for payment every validly presented Visa card, and a similar MasterCard rule, constituted an illegal tying arrangement in
violation of Section 1 of the Sherman Act. On June 4, 2003, the parties signed a settlement agreement that was approved by the court on December 19, 2003.
Pursuant to the settlement agreement, Visa agreed to modify its "Honor All Cards" rule such that a merchant may accept only Visa check cards, only Visa
credit cards, or both. Visa also agreed to pay approximately $2.0 billion to the merchant class over 10 years in equal annual installments of $200 million per
year, among other things.
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