News Coverage of Antitrust Exemption

"US Official: Credit card bill could harm consumers" Reuters »

H.R. 5546: SPECIAL INTEREST LEGISLATION HARMS CONSUMERS!

The Conyers Cannon bill is government intervention at its worst, delivering a financial windfall to the world’s largest and most profitable retailers, while leaving consumers,community banks and credit unions to pick up the tab.

This bill legalizes collusion among the largest and most profitable retailers.

• This collective bullying by large retailers means that consumers will finance the retailers windfall profits.
  
  
• A cartel of giant retailers will be allowed to refuse a customer’s credit card AT THE REGISTER. Consumers who rely on prepaid cards for their paychecks, for state benefits and for social security benefits could be rejected at the point of sale, impacting more than 1 million individuals in 34 states who receive state benefits via payment cards, and hundreds of thousands of Social Security recipients that will soon receive Federal benefits on cards.

HR 5546 permits retailer boycotts of debit and credit cards. They can decide not just how much you pay but HOW you pay.

• This cartel of giant retailer would be allowed to hold the nation’s electronic payments system hostage until their demands are met.
  
  
• Anti-trust exemptions are rare and almost always prohibit boycotts. This legislation does not.

The Department of Justice and the Federal Trade Commission warn that this bill would reduce competition and harm consumers, and raises serious “constitutional concerns.”

• The DOJ and the FTC both wrote to Rep. Lamar Smith on June 23, 2008, to strongly oppose the antitrust exemption granted to giant retailers by this legislation. They objected to the price control board and rejected the notion that the government is better equipped to determine the price of goods and services than the marketplace.
  
  
• The Justice Department echoed what industry has been saying for months, “this bill may actually harm consumers, not help them.”
  
  
• The DOJ advised Congress that “the joint negotiations among merchants exempted by the bill appear to be the type of naked collusion that the antitrust laws condemn as per se unlawful.”
  
  
• DOJ notes that this action would be a slippery slope, in that the antitrust exemption could extend to areas beyond covered electronic payments systems.
  

Consumers will see increased cost of credit and reduced access to affordable credit for those who need it most.

• There is no protection in the bill to direct giant retailers to pass any saving along to their customers.
  
  
• In Australia, where the government has already imposed a Conyer-Cannon-like solution, , retailers are profiting while their customers are paying higher prices for credit and getting fewer benefits and rewards.
  
  
  • Consumers are funding these windfall profits to the merchants.
    
  • Consumers are charged check out fees at the register when they pay with plastic. Retailers have, as predicted, shifted their cost of doing business to their customer.

Small community banks and credit unions, charities and colleges, public safety officers and teachers – all will be hurt by this onerous legislation.

• Already operating at thin or negative profit margins on credit and debit card business, many would no longer be able to offer this service, forcing their customers/members to look elsewhere.
  
  
• Any group with an affinity card will lose the revenue that these payment options provide.
  
  
• The credit and debit card market would get squeezed to a handful of larger financial institutions that could, due to economies of scale, afford to stay in this business.