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U.S. sues three top credit card companies

WASHINGTON - The Justice Department Monday sued the three largest U.S. credit card companies for anticompetitive practices and reached a proposed settlement with two of them, MasterCard and Visa.

"We want to put more money in consumers' pockets, and by eliminating credit card companies' anticompetitive rules we will accomplish exactly that," Attorney General Eric Holder said Monday. "The companies put merchants and their customers in a no-win situation" and "consumers are being held hostage."

In papers filed in federal court in Brooklyn, the department and various state attorneys general sued Visa, MasterCard and American Express, saying they were attempting to insulate themselves from competition.

At the same time, the Justice Department filed a settlement it has reached with Visa and MasterCard. The companies agree not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card. Visa and MasterCard also must allow merchants to express preferences for the use of a low-cost card within a network or other form of payment.

Each time consumers use a credit card for a purchase, the merchant must pay a fee. Such fees brought in $35 billion last year to the three card companies and their affiliated banks.

Assistant Attorney General Christine Varney said, "We remain open to seek a settlement with American Express."

Shares of American Express closed at $39.05, down 6.5 percent; Mastercard ended at $222.64, down 0.95 percent, and Visa settled at $73.24, down 0.11 percent. - AP

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