Discover sues card giants over loss cause

Source: Agencies  |   2008-6-11  |     NEWSPAPER EDITION

DISCOVER Financial Services is seeking US$6 billion in damages in a 2004 lawsuit against Visa Inc and MasterCard Inc over anti-competitive rules that Discover claims limited its growth, according to documents unsealed on Monday.

A footnote in a court filing among dozens of documents unsealed indicated Discover is seeking about US$6 billion, before damages are potentially tripled, under one damage theory in the case.

Under an alternative theory in the case, revolving around failed discussions between Citigroup Inc's Citibank unit and Discover in 1997 and in 1998 over possibly creating a joint payment-card network, the credit card company is seeking US$3 billion in damages, according to court filings.

Discover, formerly a unit of Morgan Stanley, sued Visa and MasterCard in 2004, seeking damages for rules imposed by the credit-card giants that allegedly precluded their member banks from issuing credit and debit cards over the Discover network.

The lawsuit was filed shortly after the United States Supreme Court let stand a lower court ruling that forced Visa and MasterCard to allow their member banks to issue credit cards on rival networks.

MasterCard noted on Monday that Discover's suit relates to MasterCard's Competitive Programs Policy, which was withdrawn following the Supreme Court decision.

MasterCard said Discover has not seen any increase in its overall percentage of the credit card volume share from third-party issuance since the policy was withdrawn.