Visa 2012 Annual Report Download - page 108

Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
was also named as a defendant in more than 30 of these complaints. The cases allege, among other things, that Visa's and
MasterCard's purported setting of interchange reimbursement fees, their “no surcharge” rules, and alleged tying and bundling of
transaction fees violate federal antitrust laws. On October 19, 2005, the Judicial Panel on Multidistrict Litigation issued an order
transferring these cases to the U.S. District Court for the Eastern District of New York for coordination of pre-
trial proceedings (MDL
1720). On April 24, 2006, the group of purported class plaintiffs filed a First Amended Class Action Complaint. Taken together, the
claims in the First Amended Class Action Complaint and in the 13 complaints brought on behalf of individual merchants are
generally brought under Sections 1 and 2 of the Sherman Act. In addition, some of these complaints contain certain state unfair
competition law claims. These interchange-related cases seek money damages (alleged in the consolidated class action complaint
to range in the tens of billions of dollars), subject to trebling, as well as attorneys' fees and injunctive relief.
As part of the retrospective responsibility plan, Visa U.S.A. and Visa International entered into an interchange judgment
sharing agreement with certain member financial institutions of Visa U.S.A. on July 1, 2007.
On January 8, 2008, the district court adopted the recommendation of the Magistrate Judge and granted defendants' motion to
dismiss the class plaintiffs' claims for damages incurred prior to January 1, 2004.
On January 29, 2009, class plaintiffs filed a Second Consolidated Amended Class Action Complaint. Among other things, this
complaint: (i) added new claims for damages and injunctive relief against Visa and the bank defendants regarding interchange
reimbursement fees for Visa PIN-debit cards; (ii) added new claims for damages and injunctive relief against Visa and the bank
defendants since the time of Visa's IPO regarding interchange reimbursement fees for Visa's credit, offline debit, and PIN-debit
cards; (iii) eliminated claims for damages relating to the so-called “no-surcharge” rule and “anti-steering” rules; (iv) eliminated
claims for damages based on the alleged tie of network processing services and payment guarantee services to the payment card
system services; and (v) added Visa Inc. as a defendant.
In addition, class plaintiffs filed a Second Supplemental Class Action Complaint (the “Supplemental Complaint”) against Visa
Inc. and several financial institutions challenging Visa's reorganization and IPO under Section 1 of the Sherman Act and Section 7
of the Clayton Act. In the Supplemental Complaint, class plaintiffs seek unspecified monetary damages and declaratory and
injunctive relief, including an order that the IPO be unwound.
On February 7, 2011, Visa entered into an omnibus agreement that confirmed and memorialized the signatories' intentions
with respect to the loss sharing agreement, the judgment sharing agreement and other agreements relating to certain interchange
litigation. Under the omnibus agreement, the monetary portion of any settlement of the interchange litigation covered by the
omnibus agreement would be divided into a MasterCard portion at 33.3333% and a Visa portion at 66.6667% . In addition, the
monetary portion of any judgment assigned to Visa-
related claims in accordance with the omnibus agreement would be treated as a
Visa portion. Visa would have no liability for the monetary portion of any judgment assigned to MasterCard
-related claims in
accordance with the omnibus agreement, and if a judgment is not assigned to Visa-related claims or MasterCard-related claims in
accordance with the omnibus agreement, then any monetary liability would be divided into a MasterCard portion at 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.
On July 13, 2012, Visa Inc., its wholly-owned subsidiaries Visa U.S.A. and Visa International, MasterCard Incorporated,
MasterCard International Incorporated, various U.S. financial institution defendants, and the class plaintiffs signed a memorandum
of understanding (the “MOU”) which obligated the parties to enter into a settlement agreement in the form attached to the MOU to
resolve the class plaintiffs' claims. On October 19, 2012, those same parties signed a settlement agreement (the “Settlement
Agreement”) to resolve the class plaintiffs' claims.
The terms of the Settlement Agreement include, among other terms:
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• A comprehensive release from participating class members for liability arising out of claims asserted in the
litigation, and a further release to protect against future litigation regarding default interchange and the other U.S.
rules at issue in the MDL;