Discover Financial Services, the fourth-biggest U.S. credit card company, settled an antitrust suit in which it sought $18 billion from larger rivals Visa Inc. and MasterCard Inc. for blocking banks from issuing its cards.
The accord came as trial was to begin Tuesday in Manhattan federal court. Terms weren't disclosed, but UBS analyst Adam Frisch in New York wrote that "industry sources" said the case was settled for $2.8 billion, of which $1 billion would go to former Discover parent Morgan Stanley. MasterCard will pay $900 million and Visa $1.9 million, he said.
For The Record
Los Angeles Times Friday, October 17, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 46 words Type of Material: Correction
Antitrust suit: An article in Wednesday's Business section about Discover Financial Services settling an antitrust suit with Visa Inc. and Master- Card Inc. reported that UBS analyst Adam Frisch, citing industry sources, said Visa would pay $1.9 million. Frisch had said the amount was $1.9 billion.
The three credit card companies said in statements that details of the accord were still being negotiated.
U.S. District Judge Barbara Jones in Manhattan had ordered Visa and MasterCard in 2001 to stop forcing banks to choose between their cards and ones from Discover and American Express Co. Her order came after the Justice Department sued the credit card giants, alleging antitrust violations. The U.S. Supreme Court refused to review the ruling on Oct. 4, 2004. Discover sued the same day.
Jones had said she would tell the jury that Visa's and MasterCard's rules were illegal restraints on trade. Jurors were then to decide whether Discover was harmed by the practices, and by how much.