Wednesday, July 3, 2019
In a detailed letter to the FTC, the RILA also pushed for government action to compel greater competition in credit and debit card acquiring. Think in terms of interchange pricing and honor-all-cards requirements.
“Today, there is no reason why merchants should be required to accept every credit or debit card issued under a network brand, no matter the price imposed by the network, and no reason why merchants should not be enabled to negotiate pricing as they do with any other service provider,” Brian Dodge, RILA’s chief operating officer, wrote in the letter.
For the past year the FTC has been on a fact-finding mission into whether changes in the economy, technology and business practices demand adjustments to competition and consumer protection laws, as well as federal enforcement priorities and policies. It wrapped up a series of public hearings in June 2019, and has been soliciting written comments from consumers, academics, and retailing and technology firms.
In its comments letter submitted June 30, the RILA pressed the FTC to “modernize” the way it enforces antitrust laws. For example, the trade group argued, control over information can have anti-competitive effects just like market power and control over pricing.
“It should thus be quite concerning to the Commission that Amazon and Google control the majority of all Internet product searches, and can very easily affect whether and how price and product information actually reaches consumers,” the letter stated. “[O]ur view is that modern antitrust enforcement needs to be driven by a greater recognition that control over information can drive anticompetitive effects just as much as market power and price control.”
The RILA is not alone. The House Judiciary Committee launched a bipartisan investigation in June into competition in digital markets and technology platforms. “The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today. Market power in digital markets presents a whole new set of dangers,” Representative David Cicilline, D-R.I., chair of the House Judiciary Antitrust Subcommittee, said in a statement about the investigation. “[I]t is vital for Congress to step in to determine whether existing laws are adequate to tackle abusive conduct by platform gatekeepers or if we need new legislation.”
Representative Doug Collins, R-Ga., ranking Republican on the Judiciary Committee, offered a similar assessment. “As tech has expanded its market share, more and more questions have arisen about whether the market remains competitive. Our bipartisan look at competition in the digital markets gives us a chance to answer these questions and, if necessary, to take action,” he said.
The RILA also sounded an alarm over the market power of Internet service providers. Retailers are “particularly dependent” upon these firms to digitally connect with customers, Dodge wrote. “This deeper reliance creates opportunities for beneficial partnership with ISPs,” he added. “But as retailers have experienced with the payments industry and its ever-increasing interchange fees, retailers are also concerned about becoming the target of rent-seeking ISPs who control the flow of indispensable information to and from consumers.”
In its letter to the FTC, the RILA directed some of its harshest criticism toward the leading payment card networks, Mastercard and Visa. It described the interchange pricing model for credit and debit card payments as something that “became entrenched during the Mad Men era.”
“While Visa and Mastercard are no longer owned by their member banks, the fundamental proposition remains the same: banks do not compete for merchant acceptance of their credit cards and banks all agree to accept the same interchange fees as their competitors are receiving,” Dodge stated. “Technology has obviated the need there may once have been for this type of competitor collaboration; it should not be allowed to continue in this age of sophisticated technology simply because it was necessary decades ago.”
The RILA letter concluded by calling on the Department of Justice to “draw on the robust record” the FTC has collected over the past year to launch “a new review of this [card pricing] arrangement and take action to end this antiquated and anticompetitive business model.”
The RILA counts as members more than 200 of the largest retailers in the United States, which combined ring up more than $1.5 trillion in annual sales. In addition to Walmart, other big-name members include Target, Best Buy, Home Depot and the Gap. 
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