• Visa and MasterCard both allowed “duality” – a practice of allowing a bank to issue the cards of both networks
• But both Visa and MasterCard precluded member banks from issuing cards from networks other than Visa or MasterCard
• Duality undercut purported justification for excluding other networks - creating “cohesion” among card issuing banks
• Absence of exclusivity rules outside U.S. also undercut the purported justification since there was no evidence of harm from non-exclusivity
• Banks issuing Visa and MasterCard could not issue cards processed on other networks
• But at the same time, they could not give up Visa and MasterCard due to the popularity of those cards
• Effect of exclusivity was to preclude competing networks from growth opportunities through banks already issuing Visa or MasterCard
• Yet while the credit card issuance market appeared to be competitive, the level of network competition was less than overwhelming. Not only did only four networks compete (Visa, MasterCard, American Express, and Discover), but competition among these networks was almost docile. Neither Visa nor MasterCard was seen to compete aggressively against the other. Moreover, both associations consistently increased interchange fees (the effective charge to merchants for handling transactions) in lock-step fashion for years.
• The DOJ's suit focused both on duality and the exclusionary rules. As to duality, the allegation was that the dual membership of Visa and MasterCard stifled network competition. The second claim alleged that both Visa and MasterCard adopted exclusionary rules that prohibit member banks from doing business with other networks such as American Express and Discover. Although Visa and MasterCard allowed member banks to issue each others' cards, if a bank chose to issue an American Express card or Discover card, that bank would lose its right to issue Visa and MasterCard products.