Priceless: The Case That Brought Down the Visa/MasterCard Bank Cartel by Lloyd Constantine Read Free Book Online

Nintendo, the third and fourth of our multi-state price-fixing cases against Japanese consumer electronics conglomerates in three years. We had successfully sued Panasonic and Minolta the previous two years. Years later, I would get the attention of my antitrust students at Fordham Law School by reading aloud from Michael Crichton’s The Rising Sun, where a character refers to four of my cases and says:
    Yeah. And we’re looking at Nakamoto. My sources keep telling me Nakamoto’s going to get hit with a price-fixing suit. Price-fixing is the name of the game for Japanese companies. I pulled a list of who’s settled lawsuits. Nintendo in 1991, price-fixing games. Mitsubishi that year, price-fixing TVs. Panasonic in 1989. Minolta in 1987. And you know, that’s just the tip of the iceberg.
    But back in 1990, I realized that if I were to defer my departure until my new cases were over, other cases would just replace them, and I would either never leave or would more likely be kicked out by a new attorney general who would replace Bob Abrams. It was clear by mid-1990 that Bob would run for the Senate in 1992 against Al D’Amato, who was engulfed in a series of scandals that left him vulnerable. So I started looking for a job while trying to get as much done as possible. We sued Mitsubishi before I left. This was the first time in which all fifty states joined to bring an antitrust case. We settled this case on my last day with the New York attorney general’s office, January 7, 1991.
    On January 8, 1991, I became a partner in the New York office of the large, Chicago-based law firm McDermott Will & Emery.That first day, Andy Somers, the general counsel of American Express, had lunch with me and asked me to represent American Express in an antitrust dispute with Visa. He said he had followed the Entree case closely and had waited until I left government to hire me. I was ecstatic. When you enter private practice from government, you have no business. You go from being in demand to being the new boy with no clients, nothing to do and no power within your firm. Your impotence continues until you get your own business. And three hours after arriving at McDermott, I thought I had the type of client and business that would give me instant credibility. It also promised to keep me involved in payments systems antitrust—a specialty that I egotistically believed belonged to me.
    I never got to represent American Express, because my firm never permitted it. When Amex called, I did a “conflicts check” designed to make sure my work for them would not conflict with the firm’s work for other existing clients. The conflicts check came back clean. But in a large firm like McDermott, every partner gets to see the conflicts check and to consider the proposed representation. They consider whether, in addition to an actual conflict, there may be an “issue conflict” putting the firm on the side of an issue that another client might not like. Other partners in the firm may even consider whether they want the new guy to take on a case that might make it harder for them to get some new business in the future. The possibility of an “aspirational conflict” stopped me from representing American Express.
    Three weeks later, Visa hired me to represent them in an antitrust case against Discover. When Visa retained me, I thought it was natural and logical: I was an antitrust star. I knew the industry. As Bennet Katz, Visa’s general counsel at the time, said, “You have just knocked our brains out—I want you on our side, and I think you will agree with Visa on this issue.”
    Visa had just been sued in an antitrust case by the Discover credit card network, then owned by Sears Roebuck. A Sears subsidiary had just bought a little bankrupt industrial bank in Utah called the Mountainwest Industrial Loan Corporation. Mountainwest was a member of Visa (and MasterCard, of course) and had issued a few thousand Visa credit cards. Using this