Visa 2010 Annual Report Download - page 24

Table of Contents
Visa's setting of default interchange rates violated federal and state antitrust laws. The lawsuits have been transferred to a multidistrict litigation in the U.S.
District Court for the Eastern District of New York.
The plaintiffs in the interchange litigation seek damages for alleged overcharges in merchant discount fees as well as injunctive and other relief. The
consolidated class action complaint alleges that the plaintiffs estimate that damages will range in the tens of billions of dollars. Because these lawsuits were
brought under the U.S. federal antitrust laws, any actual damages will be trebled, and we may be subject to joint and several liability among the defendants if
liability is established. This could significantly magnify the effect of any adverse judgment.
The interchange litigation is part of the covered litigation that our retrospective responsibility plan is intended to address. The retrospective
responsibility plan may not, however, adequately insulate us from the impact of settlements of, or judgments in, the interchange litigation. Failure to
successfully defend or settle the interchange litigation would result in liability that, to the extent not covered by our retrospective responsibility plan, could
have a material adverse effect on our financial condition, results of operations and cash flows, or, in certain circumstances, even cause us to become insolvent.
In addition, even if our retrospective responsibility plan covered our direct financial exposure, settlements or judgments involving the multidistrict litigation
could include restrictions on our ability to conduct business, which could increase our cost of doing business and limit our prospects for future growth. See—
Our retrospective responsibility plan may not adequately insulate us from the impact of settlements and judgments in the covered litigation and will not
insulate us from other pending or future litigation, and See Note 22—Legal Matters to our consolidated financial statements included in Item 8 in this report.
Our retrospective responsibility plan may not adequately insulate us from the impact of settlements or final judgments.
Our retrospective responsibility plan addresses monetary liabilities from settlements of, or final judgments in, the covered litigation, which is described
in Note 22—Legal Matters to our consolidated financial statements included in Item 8 of this report. The retrospective responsibility plan consists of several
related mechanisms to fund settlements or judgments in the covered litigation. These include an escrow account funded with a portion of the net proceeds of
our initial public offering and potential subsequent offerings of our shares of class A common stock (or deposits of cash to the escrow account in lieu of such
offerings), a loss-sharing agreement and a judgment-sharing agreement. In addition, our U.S. members are obligated to indemnify us pursuant to Visa U.S.A.'s
certificate of incorporation and bylaws and in accordance with their membership agreements. These mechanisms are unique and complicated, and if we
cannot use one or more of them, we could have difficulty funding the payment of a settlement or final judgment against us in a covered litigation. This could
have a material adverse effect on our financial condition, results of operations and cash flows, or, in certain circumstances, even cause us to become insolvent.
The retrospective responsibility plan only addresses the covered litigation. The plan does not cover other pending litigation or any litigation that we
may face in the future, except for cases that include claims for damages relating to the period prior to our initial public offering that are transferred for pre-
trial proceedings or otherwise included in the interchange litigation. In addition, our retrospective responsibility plan covers only the potential monetary
liability from settlements of, or judgments in, the covered litigation. Non-monetary settlement terms and judgments in the covered litigation may require us to
modify the way we do business in the future. This could adversely affect our revenues, increase our expenses and/or limit our prospects for growth. Therefore,
even if our retrospective responsibility plan adequately safeguards us from the monetary impact of settlements of, and judgments in, the covered litigation, it
may not insulate us from all potential adverse consequences of them.
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