Visa, MasterCard Lose Federal Court Ruling

Credit card networks Visa International Inc. and MasterCard International Inc. were ordered by a federal judge to end a policy blocking member banks from issuing rivals’ cards, handing a major victory to American Express Co. and Morgan Stanley & Witter Co.’s Discover.

Visa and MasterCard together control more than 75% of U.S. credit card sales. The Justice Department filed suit against the two in 1998, accusing them of breaking antitrust law. In federal court last year, government lawyers accused the two of colluding to stifle innovation and of failing to truly compete with each other.

U.S. District Judge Barbara Jones stopped short of forcing Visa and MasterCard to change their governing structure. The networks are nonprofit associations owned by major banks that can have significant interests in both of them, a policy the government also said hindered competition.

American Express hailed the judge’s ruling as a win for consumers and said it would resume discussions with a number of banks about possible card-issuing deals.

Visa and MasterCard said they were reviewing the judge’s decision but stood behind their rules for member banks. MasterCard said it was seriously considering an appeal, although it and Visa welcomed the judge’s decision on governance.