H.R. 5546 (110th): Credit Card Fair Fee Act of 2008

110th Congress, 2007–2009. Text as of Oct 03, 2008 (Reported by House Committee).

Status & Summary | PDF | Source: GPO

IB

Union Calendar No. 588

110th CONGRESS

2d Session

H. R. 5546

[Report No. 110–913]

IN THE HOUSE OF REPRESENTATIVES

March 6, 2008

(for himself, Mr. Cannon, Ms. Zoe Lofgren of California, Mr. Shuster, Mr. Weiner, Mr. Delahunt, Mr. Platts, Mr. Welch of Vermont, Mr. Sullivan, Mr. Wilson of South Carolina, Mr. Gohmert, Mr. Hall of Texas, Mr. Boozman, and Mr. Peterson of Pennsylvania) introduced the following bill; which was referred to the Committee on the Judiciary

October 3, 2008

Additional sponsors: Mr. Carney, Mr. Ellison, Ms. Eddie Bernice Johnson of Texas, Ms. McCollum of Minnesota, Mr. Yarmuth, Mr. Shuler, Mr. Whitfield of Kentucky, Mr. English of Pennsylvania, Mr. Wamp, Mr. Tiberi, Mr. Porter, Mr. Carnahan, Mr. Marshall, Mr. Allen, Ms. Jackson-Lee of Texas, Mr. Kagen, Mr. Gonzalez, Mr. McNerney, Mr. Jones of North Carolina, Mr. Baird, Mr. Melancon, Mr. David Davis of Tennessee, Mr. King of Iowa, Mr. Inslee, Mr. Jackson of Illinois, Mr. Visclosky, Mr. Hoekstra, Mr. Rahall, Mr. Bishop of Georgia, Mr. Fattah, Mr. Klein of Florida, and Mr. Stupak

October 3, 2008

Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

Strike out all after the enacting clause and insert the part printed in italic

For text of introduced bill, see copy of bill as introduced on March 6, 2008

A BILL

To amend the antitrust laws to ensure competitive market-based rates and terms for merchants’ access to electronic payment systems.

1.

Short title

This Act may be cited as the Credit Card Fair Fee Act of 2008.

2.

Limited antitrust immunity for the negotiation and determination of rates and terms for access to covered electronic payment systems

(a)

Definitions

For purposes of this Act:

(1)

Access agreement means an agreement giving a merchant permission to access a covered electronic payment system to accept credit cards and/or debit cards from consumers for payment for goods and services as well as to receive payment for such goods and services, conditioned solely upon the merchant complying with the rates and terms specified in the agreement.

(2)

Acquirer means a financial institution that provides services allowing merchants to access an electronic payment system to accept credit cards and/or debit cards for payment, but does not include independent third party processors that may act as the acquirer’s agent in processing general-purpose credit or debit card transactions.

(3)

Antitrust Division means the Antitrust Division of the U.S. Department of Justice.

(4)

Antitrust laws has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent such section 5 applies to unfair methods of competition as well as any similar State law.

(5)

Credit card means any general-purpose card or other device issued or approved for use by a financial institution allowing the cardholder to obtain goods or services on credit on terms specified by that financial institution.

(6)

Covered electronic payment system means an electronic payment system that has been used for at least 20 percent of the combined dollar value of U.S. credit card, signature-based debit card, and PIN-based debit card payments processed in the applicable calendar year immediately preceding the year in which the conduct in question occurs.

(7)

Debit card means any general-purpose card or other device issued or approved for use by a financial institution for use in debiting a cardholder’s account for the purpose of that cardholder obtaining goods or services, whether authorization is signature-based or PIN-based.

(8)

Electronic payment system means the proprietary services and infrastructure that route information and data to facilitate transaction authorization, clearance, and settlement that merchants must access in order to accept a specific brand of general-purpose credit cards and/or debit cards as payment for goods and services.

(9)

Financial institution has the same meaning as in section 603(t) of the Fair Credit Reporting Act.

(10)

Issuer means a financial institution that issues credit cards and/or debit cards or approves the use of other devices for use in an electronic payment system, but does not include independent third party processors that may act as the issuer’s agent in processing general-purpose credit card or debit card transactions.

(11)

Market power means the ability profitably to raise prices above those that would be charged in a perfectly competitive market.

(12)

Merchant means any person who accepts credit cards and/or debit cards in payment for goods or services that they provide.

(13)

Negotiating party means 1 or more providers of a covered electronic payment system or 1 or more merchants who have access to or who are seeking access to that covered electronic payment system, as the case may be, and who are in the process of negotiating or who have executed a voluntarily negotiated access agreement that is still in effect.

(14)

Person has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)).

(15)

Provider means any person who owns, operates, controls, serves as an issuer for, or serves as an acquirer for a covered electronic payment system.

(16)

State has the meaning given it in section 4G(2) of the Clayton Act (15 U.S.C. 15g(2)).

(17)

Terms means all rules applicable either to providers of a single covered electronic payment system or to merchants, and that are required in order to provide or access that covered electronic payment system for processing credit card and/or debit card transactions.

(18)

Voluntarily negotiated access agreement means an executed agreement voluntarily negotiated between 1 or more providers of a single covered electronic payment system and 1 or more merchants that sets the rates and terms pursuant to which the 1 or more merchants can access that covered electronic payment system to accept credit cards and/or debit cards from consumers for payment of goods and services, and receive payment for such goods and services.

(b)

Limited antitrust immunity for negotiation of access rates and terms to covered electronic payment systems

(1)

Except as provided in paragraph (2) and notwithstanding any provision of the antitrust laws, in negotiating access rates and terms any providers of a single covered electronic payment system and any merchants may jointly negotiate and agree upon the rates and terms for access to the covered electronic payment system, including through the use of common agents that represent either providers of a single covered electronic payment system or merchants on a non-exclusive basis. Any providers of a single covered electronic payment system also may jointly determine the proportionate division among themselves of paid access fees.

(2)

Notwithstanding any other provision of this Act, the immunity otherwise applicable under paragraph (1) shall not apply to a provider of a single covered electronic payment system, or to a merchant, during any period in which such provider, or such merchant, is engaged in any unlawful boycott.

(c)

Nondiscrimination

For any given covered electronic payment system, the rates and terms of a voluntarily negotiated access agreement reached under the authority of this section shall be the same for all merchants, regardless of merchant category or volume of transactions (either in number or dollar value) generated. For any given covered electronic payment system, the rates and terms of a voluntarily negotiated access agreement reached under the authority of this section shall be the same for all participating providers, regardless of provider category or volume of transactions (either in number or dollar value) generated.

(d)

Facilitation of negotiation

(1)

Schedule

Within one month following enactment of this Act, the negotiating parties shall file with the Antitrust Division a schedule for negotiations. If the negotiating parties do not file such a schedule within one month from the date of enactment, the Antitrust Division shall issue such a schedule and inform the negotiating parties of the schedule. In either case, the Antitrust Division shall make the schedule available to all negotiating parties.

(2)

Initial disclosure

Within one month following enactment of this Act, the persons described in this subsection shall make the initial disclosures described in paragraphs (3), (4), and (5) to facilitate negotiations under the limited antitrust immunity provided for by this section.

(3)

Issuers, acquirers, and owners

Any person who is 1 of the 10 largest issuers for a covered electronic payment system in terms of number of cards issued, any person who is 1 of the 10 largest acquirers for a covered electronic payment system in terms of number of merchants served, and any person who operates or controls a covered electronic payment system shall produce to the Antitrust Division and to all negotiating parties—

(A)

an itemized list of the costs necessary to provide the covered electronic payment system that were incurred by the person during the most recent full calendar year before the initiation of the negotiation; and

(B)

any access agreement between that person and 1 or more merchants with regard to that covered electronic payment system.

(4)

Merchants

Any person who is 1 of the 10 largest merchants using the covered electronic payment system, determined based on dollar amount of transactions made with the covered electronic payment system, shall produce to the Antitrust Division and to all negotiating parties—

(A)

an itemized list of the costs necessary to access an electronic payment system during the most recent full calendar year prior to the initiation of the proceeding; and

(B)

any access agreement between that person and 1 or more providers with regard to that covered electronic payment system.

(5)

Disagreement

Any disagreement regarding whether a person is required to make an initial disclosure under this clause, or the contents of such a disclosure, shall be resolved by the Antitrust Division.

(6)

Attendance of antitrust division

A representative of the Antitrust Division shall attend all negotiation sessions conducted under the authority of this section.

(e)

Transparency of voluntarily negotiated access agreements

(1)

Voluntarily negotiated access agreements between negotiating parties

A voluntarily negotiated access agreement may be executed at any time between 1 or more providers of a covered electronic payment system and 1 or more merchants.

(2)

Filing agreements with the antitrust division

The negotiating parties shall jointly file with the Antitrust Division a clear intelligible copy of—

(A)

any voluntarily negotiated access agreement that affects any market in the United States or elsewhere;

(B)

the various components of the interchange fee;

(C)

a description of how access fees that merchants pay are allocated among financial institutions and how they are spent;

(D)

whether a variation in fees exists among card types;

(E)

any documentation relating to a voluntarily negotiated access agreement evidencing any consideration being given or any marketing or promotional agreements between the negotiating parties;

(F)

a comparison of interchange rates in current use in the 10 foreign countries having the highest volume of credit card transactions with the interchange rates charged in the United States under such agreement; and

(G)

any amendments to that voluntarily negotiated access agreement or documentation.

(3)

Timing and availability of filings

The negotiating parties to any voluntarily negotiated access agreement executed after the date of enactment of this Act shall jointly file the voluntarily negotiated access agreement, and any documentation or amendments described in paragraph (2), with the Antitrust Division not later than 30 days after the date of execution of the voluntarily negotiated access agreement or amendment or after the creation of the documentation. The Antitrust Division shall make publicly available any voluntarily negotiated access agreement, amendment, or accompanying documentation filed under this paragraph.

(f)

Report to Congress by the antitrust division

Within seven months after the date of enactment of this Act, the Antitrust Division shall transmit to the House Committee on the Judiciary and the Senate Committee on the Judiciary a report on the negotiations conducted under the authority of this section during the first six months after the date of enactment and, if a voluntarily negotiated agreement is reached, whether such access rates and terms will have an adverse effect on competition and how such rates compare with access rates and terms in current use in other countries. Such report shall contain a chronology of the negotiations, an assessment of whether the parties have negotiated in good faith, an assessment of the quality of the data provided by the parties in their initial disclosures, a description of any voluntarily negotiated agreements reached during the negotiations, and any recommendations of the Antitrust Division concerning how Congress should respond to the conduct of the negotiations.

(g)

Effect on pending lawsuits

Nothing in this section shall affect liability in any action pending on the date of enactment of this section.

3.

Opt-out

Nothing in this Act shall limit the ability of acquirers or issuers that are regulated by the National Credit Union Administration or that, together with affiliates, have assets of less than $1,000,000,000, to opt out of negotiations under this Act.

4.

Cardholder savings

Any agreements reached pursuant to the authority provided in section 2 shall provide that—

(1)

when any fees that a merchant is charged for access to a covered electronic payment system are reduced pursuant to any such agreement, the merchant shall pass the benefits of any such reduction in fees on to its customers or employees; and

(2)

when any fees that a financial institution collects for access to a covered electronic payment system are increased pursuant to any such agreement, the financial institution shall pass the benefits of any such increase in fees on to its customers or employees.

5.

Effective date

This Act shall take effect on the date of the enactment of this Act.

October 3, 2008

Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed