Discover Seeks $6 Billion from MasterCard, Visa

Discover Financial Services is suing Visa Inc. and MasterCard Inc. for more than $6 billion in damages for limiting its ability to partner with their member banks, according to court filings released Monday.

Discover (NYSE: DFS) originally filed the suit four years ago but this is the first time the damages figure has been disclosed.

The new information is the latest in a long series of law suits related to rules that Visa (NYSE: V) and MasterCard (NYSE: MA) once imposed on their member banks that prohibited the banks from issuing cards on other processing networks, such as Discover and American Express.

The U.S. Department of Justice sued Visa and MasterCard for antitrust violations for the rule, and a court ruled for the department in 2001. That led some Visa and MasterCard members to begin partnering with AmEx and Discover.

After the ruling, AmEx and Discover separately sued Visa and MasterCard, charging that the prohibition had slowed their growth.

Last fall, Visa paid American Express $2.25 billion to settle the suit.

A Visa spokesperson told The Wall Street Journal the $6 billion figure was “dramatically overstated.” MasterCard contends on its Web site that “Discover’s inability to grow its network has everything to do with its poor business model and nothing to do with MasterCard’s policies.”

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