Iowa Supreme Court Dismisses Antitrust Class Action Against Visa and MasterCard

In Southard et. al. v. Visa USA Inc. and MasterCard Int’l Inc. the plaintiffs in a class action alleged that Visa and MasterCard violated Iowa antitrust laws and were unjustly enriched as a result of Visa and MasterCard’s tying arrangement whereby merchants who accepted credit cards were required to accept debit cards.  As discussed in an earlier article, Visa and MasterCard entered into a multi-billion dollar settlement with merchants as a result of this alleged tying arrangement.

The plaintiff class members claimed that under this arrangement merchants were forced to pay inflated fees which were passed on to consumers.  They asserted that they were indirect purchasers under Comes v. Microsoft, in which the Iowa Supreme Court rejected the application of the federal rule prohibiting indirect purchaser antitrust suits to Iowa’s antitrust laws. 

The Iowa Supreme Court affirmed the lower court’s dismissal of the plaintiffs’ claim.  It reasoned that the plaintiffs’ alleged injuries were too remote to occasion antitrust standing.  As to the plaintiffs’ contention that they were indirect purchasers with antitrust standing under Comes v. Microsoft the court stated that the plaintiffs were not purchasers at all.  In Comes, the “indirect purchasers” ultimately bought the Microsoft software in question.  In this case, the consumers did not purchase the product subject to the alleged anticompetitive behavior—debit processing services.  The merchants were the end-purchasers of the debit processing services; the consumers merely bought consumer goods.    

Therefore, the court made it clear that the expansive language of Comes (stating that Iowa law creates a cause of action for “all consumers regardless of one’s status as a direct or indirect purchaser) does not give standing to all consumers injured by anticompetitive behavior.  Even if adversely affected by anticompetitive behavior, consumers will not have antitrust standing under Iowa law unless they are direct or indirect purchasers of the product in question.  Being charged a higher price for other goods, even if the higher price is the result of anticompetitive behavior, will not give a potential plaintiff standing as an indirect purchaser.

If you have any questions or comments, contact Jeffrey Andersen.