Visa 2008 Annual Report Download - page 181

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
Household International Inc., Wells Fargo & Company, Providian Financial Corp. and U.S.A.A. Federal Savings Bank). Subsequently, U.S.A.A. Federal
Savings Bank, Bank of America Corp. and Household International Inc. announced settlements with American Express and were dismissed from the case.
The complaint, which was filed in the U.S. District Court for the Southern District of New York, was designated as a related case to the DOJ litigation and
was assigned to the same judge. The complaint alleged that the implementation and enforcement of Visa U.S.A.'s bylaw 2.10(e) and MasterCard's CPP
violated Sections 1 and 2 of the Sherman Act in an alleged market for general purpose card network services and an alleged market for debit card network
services.
Visa Inc., Visa U.S.A. and Visa International entered into a settlement agreement with American Express that became effective on November 9, 2007.
Under the settlement agreement, American Express will receive maximum payments of $2.25 billion, including up to $2.07 billion from Visa Inc. and $185
million from five co-defendant banks. An initial payment of $1.13 billion will be made on or before March 31, 2008, including $945 million from Visa Inc.
and $185 million from the five co-defendant banks. Beginning April 2008, Visa Inc. will pay American Express an additional amount of up to $70 million
each quarter for 16 quarters, for a maximum total of $1.12 billion. The quarterly payments are contingent upon the performance of American Express's United
States global network services (GNS) business and will be in an amount equal to 5% of American Express's United States GNS billings during the quarter up
to a maximum of $70 million per quarter; provided, however, that if the payment for any quarter is less than $70 million, the maximum payment for a future
quarter or quarters shall be increased by the difference between $70 million and such lesser amount as was actually paid. Future payments discounted to $1.9
billion using a rate of 4.72% over the payment term is reflected in current and long-term accrued litigation obligation on the consolidated balance sheet at
October 1, 2007. The settlement will be covered by the Retrospective Responsibility Plan. See also Note 5—Retrospective Responsibility Plan.
On March 31, 2008, the initial payment to American Express of $1.13 billion described in the settlement agreement was made by Visa Inc. Of this
amount, $945 million was funded through the litigation escrow account established under the Retrospective Responsibility Plan, and $185 million was funded
by the five co-defendant banks. American Express has met the performance criteria set forth in the settlement agreement for each quarter, including the fourth
fiscal quarter of fiscal 2008, and Visa made each of the corresponding settlement payments. See Note 5—Retrospective Responsibility Plan.
The Attridge Litigation
On December 8, 2004, a complaint was filed in California state court on behalf of a putative class of consumers asserting claims against Visa U.S.A.,
Visa International and MasterCard under California's Cartwright Act and Unfair Competition Law. The claims in this action, Attridge v. Visa U.S.A. Inc., et
al., seek to piggyback on the portion of the DOJ litigation in which the U.S. District Court for the Southern District of New York found that Visa's bylaw
2.10(e) and MasterCard's Competitive Programs Policy constitute unlawful restraints of trade under the federal antitrust laws. After the plaintiff twice
amended his complaint, Visa U.S.A., Visa International and MasterCard demurred to (moved to dismiss) the complaint and, at a hearing on November 2,
2005, the court dismissed plaintiff's claims with leave to amend. On December 2, 2005, the plaintiff filed a third amended complaint. The defendants again
demurred to (moved to dismiss) that complaint. On May 19, 2006, the court entered
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