Visa 2008 Annual Report Download - page 186

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
Department of Justice Antitrust Case and Related Litigation
In October 1998, the U.S. Department of Justice, or DOJ, filed suit against Visa U.S.A., Visa International and MasterCard in the U.S. District Court
for the Southern District of New York alleging that both Visa U.S.A.'s and MasterCard's governance structures and policies violated U.S. federal antitrust
laws. On October 9, 2001, the District Court issued an opinion upholding the legality and pro-competitive nature of "dual governance," the situation where an
employee of a member financial institution also serves on the board of directors of Visa U.S.A. or MasterCard while a portion of its card portfolio is issued
under the brand of the other association. However, the court also held that Visa U.S.A.'s bylaw 2.10(e), which prohibited Visa members from issuing
American Express or Discover cards, and a similar MasterCard rule constituted unlawful restraints of trade under the federal antitrust laws.
On November 26, 2001, the court issued a final judgment that ordered Visa U.S.A. to repeal bylaw 2.10(e) and enjoined Visa U.S.A. and Visa
International from enacting or enforcing any bylaw, rule, policy or practice that prohibits its issuers from issuing general purpose credit or debit cards in the
United States on any other general purpose card network. The final judgment also allowed some Visa issuers to terminate their issuance agreements. The final
judgment imposed parallel requirements on MasterCard. After all appeals were exhausted, the final judgment became effective by court order on October 15,
2004.
Settlement Service Fee Litigation
On January 10, 2005, MasterCard filed a motion in the U.S. District Court for the Southern District of New York in connection with the DOJ litigation,
renewing an earlier challenge to a Visa U.S.A. bylaw that provides for a settlement service fee. To ensure payment of Visa U.S.A.'s settlement obligation in
the In re Visa Check/ MasterMoney Antitrust Litigation case, Visa U.S.A. adopted the settlement service fee bylaw in June 2003. The bylaw provided that the
settlement service fee is to be paid by certain Visa U.S.A. members that shift a substantial portion of their offline debit volume to another debit brand unless
that shift is to the American Express or Discover brands. MasterCard contended that the settlement service fee violated the final judgment in the DOJ
litigation by effectively prohibiting Visa U.S.A. members from issuing MasterCard debit cards.
On August 18, 2005, the court issued an order appointing a special master to hear evidence regarding MasterCard's challenge. An evidentiary hearing
before the special master occurred in December 2005. In July 2006, the special master submitted his Findings of Fact and Conclusions of Law to the court, in
which he concluded that Visa U.S.A. did not violate the final judgment in the DOJ action before October 15, 2004—the effective date of the Final Judgment
—but that Visa U.S.A. did violate the final judgment by continuing to enforce the settlement service fee after October 15, 2004. Visa U.S.A. filed objections
to the special master's report and MasterCard asked the court to adopt the special master's findings and conclusions. The court heard oral argument with
respect to the proper scope of any remedy on April 23, 2007.
On June 7, 2007, the court issued an Opinion and Order holding that the settlement service fee violated the final judgment in the DOJ case as of
October 15, 2004. On June 15, 2007, the court issued an Amended Opinion and Order, clarifying the remedy in the ruling. First, the court ordered Visa U.S.A.
to repeal the settlement service fee bylaw. Second, the court gave any Visa U.S.A. debit issuer subject
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