By Carter Dougherty

The last 40 years have witnessed all manner of trampling on our antitrust laws, from the intellectual con of “consumer welfare” to the blanket non-enforcement of foundational statutes like the Robinson-Patman Act. Now we’re staring down the barrel of something worse: a court that might not just look away from the law, but actively break it, by blessing a legal settlement that sanctions price-fixing across a vast swath of the American economy.

Judge Brian Cogan, a Bush appointee in the Eastern District of New York, has given preliminary approval to a settlement between a small group of merchants and the dominant players in our payment system. It would give judicial fiat to the power that furnishes Visa, Mastercard, and the biggest banks in the United States with economic rents that would make a 19^th century plutocrat blush.

Merchants, and by extension, consumers, in 2025 paid $198.25 billion in “swipe fees,” as they are known, for the privilege of paying with plastic, to the credit card monopolists. Technology has gotten faster and cheaper, but that number has almost doubled since the pandemic. Visa and Mastercard, with about 50 percent profit margins, set these charges and split the take with the oligopoly of megabanks—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Capital One—that dominate card issuance.

Purchase anything with a card and the merchant slices off a little under 3 percent of the sale and forwards it to today’s monopolists. The consumer pays much of the final bill since merchants, with much tighter margins than a Visa or a JPMorgan Chase, face intense pressure to pass on higher costs. And with cards still the primary form of payment, a merchant who refuses cards won’t sell jack.

A class-action lawsuit filed in 2005, In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, has brought us to this point. Initially filed by a clutch of retailers and restaurateurs, the case has now produced a settlement that is actually opposed by a much larger group of merchants, who have better arguments to kill the agreement than supporters have to approve it.

It would knock a fraction of a percentage point (10 basis points) off swipe fees and cap them only for so-called “standard” credit cards, a category covering only the cards with almost no rewards attached, a shrinking portion of the business. Today’s “premium” cards with much higher swipe fees, like Chase’s Sapphire card, are driving costs upward in this market.

Visa, Mastercard, and the big banks would not have to compete in the market for payment services under this settlement. They would, however, walk away with broad immunity from any swipe-fee lawsuits for 8 years.

Cogan seems so thoroughly captured, cognitively speaking, that structural change seems not to register with him as even a possibility. At a hearing on the proposed settlement, he tipped his hand: “to complain about having fixed [swipe fees] — what is the alternative that isn’t complete chaos?” This tidy tautology benefits only the incumbent monopolists: it assumes that centrally fixed fees can only ever be set centrally, that no other arrangement could possibly work. That, respectfully, is not his call to make.

My organization, Demand Progress, teamed up with three others—American Economic Liberties Project, Consumer Reports, and Small Business Majority—to make an argument that has too often gotten lost in the shuffle amid the case’s details on payment systems. No matter how much the monopolists might scream, no matter how many experts weigh in with detailed analyses, no matter how old-fashioned it sounds, do not green-light violations of the antitrust laws passed by Congress, least of all the price-fixing baked into this proposed settlement.

When lawmakers passed the Sherman Act in 1890, they built the foundation for a private sector whose underlying principle, they hoped, would be competition, not conquest and control. The backdrop to the law’s passage was, of course, the overmighty power of Gilded Age monopolists over the political economy of their era. Congress chose competition as the vehicle to preserve both meaningful democratic governance and broad-based prosperity.

“The Sherman Act therefore seeks to nurture and preserve in every market a process of rivalry by which independent firms compete vigorously with each other on their offerings—whether by making their prices more favorable, by improving the quality of their products, or by other means,” we wrote in our objection to the settlement.

This settlement would put the full force of the judiciary behind practices that are crassly anticompetitive. Visa and Mastercard would go right on setting most fees and coordinating their work with banks. They’d also keep enforcing a rule that requires merchants to accept all the cards branded Visa and Mastercard, depriving them of the ability to reject the ones with higher fees and force real price competition. The proposal is, we wrote in our objection, “a joint monopolization scheme masquerading as a settlement.”

The case’s legal dynamics weigh down the likelihood of winning real change in our payment system. Initially, a small group of merchants brought multiple cases, which the courts folded into a single class action (Multi-District Litigation 1720) against Visa, Mastercard, and the big banks. The court-appointed plaintiffs’ lawyers now speak for a sliver of the affected parties, but they have their own incentive to get to yes: hundreds of millions of dollars in fees waiting on the other side of a final deal.

Settlements already have a checkered history in this case. Previous judges rejected two proposals; an appellate court nixed a third. If Cogan grants final approval to the current one, it faces an all-but-certain appeal, the only way that would be left to stop it. The negotiating process has run its course. The best alternative is as old as the judiciary: a trial.

This case has dragged on so long that the discovery materials in the case, the key evidence, is a decade or more old. The sharpest growth in swipe fees has occurred since the pandemic, meaning the clearest evidence of abuse of market power may lie buried in the records of the last 5 years. The massive effort by lawyers on behalf of a small number of plaintiffs has thrown off the natural alignment of merchants, consumer advocates, and antimonopoly activists. If the plaintiffs’ lawyers want to do right by everyone but Wall Street, they can and should ask the judge for a trial, not a lousy settlement.

In fits and starts, the United States has entered a period in which we are rediscovering and applying the proud tradition of antimonopoly thought and action, fostered by a deeply rooted suspicion of corporate power in the public mind. The most vivid legal demonstration of the antimonopoly tradition has always been, since the Sherman Act, a big antitrust proceeding, in the light, for all to see.

Forget lame settlements. It’s time to put Visa, Mastercard and Wall Street’s biggest banks on trial.

Carter Dougherty is the Senior Fellow for Antimonopoly and Finance at Demand Progress.