Lawsuit claims Apple, Visa, Mastercard made anticompetitive agreements

Visa Mastercard lawsuit overview:

• Who: Plaintiff Mirage Wine & Spirits filed a class action lawsuit against Apple, Visa and Mastercard.
• Why: Apple, Visa and Mastercard allegedly engaged in anticompetitive conduct that blocked mobile-based payment systems from competing with point-of-sale payment networks, causing merchants to pay higher fees.
• Where: The Apple lawsuit was filed in Illinois federal court.

Apple Inc., Visa Inc. and Mastercard Inc. conspired to block competitors’ mobile-based payment systems from competing with point-of-sale payment networks, an antitrust class action lawsuit alleges.

Plaintiff Mirage Wine + Spirits, doing business as Mirage Wine & Spirits, is a merchant that accepts Apple Pay as a payment method at its point of sale. Due to Apple’s allegedly anticompetitive agreement with Visa and Mastercard, Mirage allegedly paid higher fees for point-of-sale transactions at prices that were artificially inflated, according to the Apple lawsuit.

Visa lawsuit alleges Apple agreed not to establish its own point-of-sale payment network

Before the launch of Apple Pay on iPhones in 2014, Visa and Mastercard were allegedly concerned the new payment method could reduce the fees they charge merchants who use their point-of-sale transaction networks.

Instead of competing in the point-of-sale card network services market, Apple reached agreements with Visa and Mastercard not to use iPhones to establish its own point-of-sale transaction payment network. Under the agreement, Visa and Mastercard agreed to run Apple Pay transactions over the established point-of-sale payment networks, the Apple lawsuit says.

“Upon information and belief, Apple agreed with [Visa, Mastercard, American Express and Discover] to protect their market division from competition by blocking third parties from accessing certain hardware in the iPhone” that could be used by the third parties to establish competing mobile-based payment solutions, according to the Visa lawsuit.

Payments now worth billions annually, lawsuit claims

In exchange, the credit card companies reportedly agreed that Apple would be paid a portion of the fees generated through the point-of-sale transaction payment systems. The Apple lawsuit says these payments are now worth billions of dollars each year.

“But for this anticompetitive agreement, Apple had the incentive to welcome all payment solutions to its Apple Pay wallet as it derived its income by taking a percentage of the transaction fee earned by the payment system on its transactions facilitated by Apple Pay,” the Visa lawsuit says.

“By agreeing to protect [Visa and Mastercard] from competition from other payment systems, Apple was forgoing significant revenue.”

Mirage filed the Apple lawsuit on behalf of itself and a proposed class of U.S. merchants that accepted Apple Pay as a payment method at the physical point of sale since Dec. 14, 2019.

The 2nd U.S. Circuit Court of Appeals recently upheld a $5.6 billion class action settlement over allegations Visa and Mastercard overcharged merchants on interchange fees for debit and credit card transactions.

What do you think about the Apple lawsuit? Tell us about it in the comments.

The plaintiff is represented by Stephen M. Tillery, Christopher M. Burke, Walter W. Noss, Yifan (Kate) Lv and Marc Wallenstein of Korein Tillery PC; K. Craig Wildfang, Thomas J. Undlin, Stacey P. Slaughter, Ryan R. Marth, Geoffrey H. Kozen and Stephanie A. Chen of Robins Kaplan LLP; David R. Scott, Patrick J. McGahan, Carmen Medici and Sean Russell of Scott+Scott Attorneys at Law and Amelia F. Burroughs of Burroughs Legal.

The Apple Visa Mastercard lawsuit is Mirage Wine + Spirits Inc. d/b/a Mirage Wine & Spirits v. Apple Inc., et al., Case No. 3:23-cv-03942, in the U.S. District Court for the Southern District of Illinois.

Read About More Class Action Lawsuits & Class Action Settlements:

• Pioneer Bank class action alleges company improperly assesses overdraft fees
• CFPB issues Bank of America $12M fine over alleged false mortgage applicant information
• Wells Fargo to pay $35M to settle claims it wrongfully charged advisory fees
• Apple Federal Credit Union charges inappropriate overdraft fees, class action alleges