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Concord EFS' To-do List Gets Longer Every Day

It's been busy at Concord EFS, Inc. recently: On Jan. 22, 2004, NYCE Corp. filed a lawsuit against Concord, charging it violated a 1993 agreement concerning the routing of point-of-sale transactions. On Jan. 26, Concord announced the date for the special meeting where shareholders will vote on the proposed merger with First Data Corp.

The NYCE suit against Concord concerns its STAR network routing practices and was filed in Superior Court of the State of New Jersey. NYCE is charging Concord and its operating entities with violating several terms of the agreement and engaging in other unlawful conduct as a result of operating rules it has adopted and is attempting to enforce.

NYCE says the agreement obligates both NYCE and Concord and their respective affiliates to allow participating financial institutions, that issue cards branded with either network logo, to designate which EFT network they want to rout transactions through. The complaint filed by NYCE alleges that member financial institutions don't have that choice, in actuality, and that transactions generally go through the STAR network.

Meanwhile, the meeting for Concord's shareholders will take place on Feb. 26, 2004; their approval for the proposed takeover is required. First Data's shareholders approved the merger on Oct. 28, 2003. In December, First Data settled a suit brought by the U.S. Department of Justice (DOJ) because of antitrust issues the proposed acquisition brought up.

Under terms of the settlement, First Data will sell its 64% stake of NYCE, the third largest PIN debit and ATM network in the United States and a competitor of Concord's STAR network, which is the nation's largest. First Data had initially planned to combine the NYCE and STAR networks, but the DOJ said the combined company would give it control over at least 50% of the PIN debit processing market, reduce competition and cause transaction fees to increase.

The merger is expected to be complete by the end of Q1 2004. What will happen to First Data's majority stake in NYCE remains undetermined.

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