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Last Updated: Thursday, 8 November 2007, 07:14 GMT
Visa makes $2.1bn Amex settlement
American Express sign
American Express wanted compensation for lost business
American Express is to accept a payment of about $2.1bn (1bn) from Visa after it sued the credit card giant and a number of large US banks.

In 2004 American Express filed a suit saying Visa, MasterCard and their member banks had illegally blocked it from the US bank-issued card business.

Under the terms of the deal, American Express will drop Visa as a defendant.

Visa said it did not concede any liability through the settlement, which has to approved by its member banks.

Cartel claim

It also said the settlement would be funded by members of Visa USA, not Visa Inc, which is preparing for an initial public offering.

American Express had claimed the card associations' "anti-competitive practices" had prevented 20,000 US banks from using Amex credit card products.

It had also accused the card associations of functioning "as a cartel".

American Express will now drop banks named in the lawsuit, including JP Morgan Chase, Capital One, US Bancorp, Wells Fargo and Providian.

Seeking 'full compensation'

American Express will receive $945m in March from Visa and another payment from the banks named in the case under a judgment sharing agreement.

Another $1.12bn will be paid in instalments of up to $70m per quarter over four years, Visa said. American Express said it could receive a maximum of $2.25bn under the settlement, including the additional payment from the banks.

The firm said that Mastercard remained the sole defendant in the lawsuit.

"We plan to move forward with the litigation to hold Mastercard accountable for the illegal actions that blocked banks from working with us for many years and to seek full compensation for the value that would have been generated for our shareholders," said American Express chairman and chief executive Kenneth Chenault.

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