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United States Court of Appeals for the Fifth Circuit
April 5, 2022, Filed
Stuart Kyle Duncan, Circuit Judge:
This appeal concerns an antitrust dispute between Pulse and Visa, competitors in the multi-billion-dollar debit network market. After litigation had been dawdling for years, the district court dismissed Pulse's Sherman Act claims against Visa for lack of antitrust standing. We reverse in part, remand for further proceedings, and direct reassignment to a different judge.
First, a brief sketch of the debit network market (infra I.A), Visa's challenged policies (infra I.B), and the district court proceedings (infra I.C).
A. The Debit Network Market
1. The Market Structure
To pay for breakfast at the local coffee shop, you swipe (or tap) your debit card. So begins an invisible process that transfers your money to the shop. The electronic architecture that makes this possible is a "debit network." This diagram shows roughly how it works:
Located at the central hub [*3] of the diagram, the debit network links the merchant's bank (or "acquirer") with the cardholder's bank (or "issuer"). Data races back and forth between acquirer and issuer. If the issuer approves the transaction, the price of breakfast zips from your account to the coffee shop's.
There are two kinds of debit networks. A "PIN network" is used when you complete a sale by punching in your personal identification number. A "signature network" is used when you sign your name. Nearly all debit cards enable one signature network and at least one PIN network.1 Notably, though, the line between the two kinds of networks has blurred: companies have developed "PINless" technology that lets PIN networks process sales that would otherwise route through signature networks.
Debit networks are not free. Two kinds of fees are collected on every transaction. First, debit network companies collect "network fees," which are their primary revenue. These are paid by both merchants and issuers. They are typically low—averaging a few cents per transaction—and slightly higher for signature than for PIN networks. Second, issuers collect "interchange fees" from merchants' banks. These make up the largest portion [*4] of the prices merchants pay for debit transactions.2 Both kinds of fees are big business. In 2019, issuers and merchants paid $2.94 billion and $5.32 billion, respectively, in network fees, and issuers received $24.31 billion in interchange fees.3
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2022 U.S. App. LEXIS 9153 *; 30 F.4th 480
PULSE NETWORK, L.L.C., Plaintiff—Appellant, versus VISA, INCORPORATED, Defendant—Appellee.
Prior History: [*1] Appeal from the United States District Court for the Southern District of Texas. USDC No. 4:14-CV-3391.
Pulse Network, LLC v. Visa, Inc., 2018 U.S. Dist. LEXIS 148652, 2018 WL 9850158 (S.D. Tex., Aug. 31, 2018)
network, merchants, antitrust, issuers, debit, prices, anti trust law, per-transaction, signature, reassignment, competitor, anticompetitive, debit card, transactions, discovery, route, argues, district court, violates, fixed fee, volume-based, integrated, policies, effects, cards, summary judgment, exclusive-dealing, proceedings, charges, compete
Antitrust & Trade Law, Consumer Protection, Deceptive & Unfair Trade Practices, Banking Law, Banking & Finance, Unfair & Deceptive Credit Practices, Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Judgments, Summary Judgment, Partial Summary Judgment, Clayton Act, Claims, Remedies, Damages, Scope, Private Actions, Standing, Requirements, Clayton Act, Price Fixing & Restraints of Trade, Per Se Rule & Rule of Reason, Sherman Act, Per Se Rule Tests, Manifestly Anticompetitive Effects, Tying Arrangements, Sherman Act Violations, Actual Monopolization, Anticompetitive & Predatory Practices, Predatory Pricing, Cartels & Horizontal Restraints, Price Fixing, Exclusive & Reciprocal Dealing, Exclusive Dealing, Inability to Proceed, Disqualification & Recusal, Federal Judges, Remands