Heartland Payment Systems Files Antitrust and Unlawful Competition Lawsuit Against MICROS Systems, Merchant Link and Chase Paymentech

  • Oracle Hospitality Food and Beverage Solutions
  • 12.03.07
Heartland Payment Systems filed an antitrust action against MICROS Systems, Inc.; Merchant Link, LLC; and Chase Paymentech, owner of Merchant Link.

The suit, filed in United States District Court in New Jersey, alleges the three companies have caused increased processing prices for table-service restaurants through an anti-competitive tying arrangement which violates the Sherman Antitrust Act and New Jersey's unfair competition laws.

The suit seeks a permanent injunction against the tying arrangements that exist between MICROS and Merchant Link. The tying arrangement forces independent competitors to pay for the use of Merchant Link's gateway in order to process credit and debit card payments on the MICROS point-of-sale (POS) platform.

"We have repeatedly tried to impress upon MICROS that its exclusive contract with Merchant Link is detrimental to the restaurant industry," said Robert O. Carr, chairman and chief executive officer of Heartland, a leading provider of credit/debit/prepaid card processing, payroll and payment services. "Merchant Link adds no unique value to the transaction clearing process. It sits between MICROS and the card processing industry, serving as a toll collector and gatekeeper for Paymentech. By creating this illegal scheme, Paymentech makes it nearly impossible for many restaurant owners to use any other card processor. Adding insult to injury, Paymentech has repeatedly charged restaurant owners a higher price than it would in a truly competitive environment."

In the complaint, Heartland describes how MICROS forces all restaurants using its POS systems to agree to use Merchant Link as the exclusive gateway for credit and debit card processing. Additionally, MICROS forces all card processors to pay a fee to Merchant Link for the privilege of connecting to the MICROS POS and allegedly receives a percentage of the revenues Merchant Link generates. The suit alleges this tying arrangement is illegal and anticompetitive - and artificially inflates card processing costs for all table-service restaurants that utilize MICROS POS systems.

The complaint also documents how Chase Paymentech uses its ownership of Merchant Link - and Merchant Link's exclusionary agreement with MICROS - to dominate the market and raise the cost of processing for all restaurants using MICROS software. The suit asserts that because it owns Merchant Link, Chase Paymentech can routinely exempt itself from the Merchant Link fees other processors must pay to do business on the MICROS platform.  Chase Paymentech, however, still charges restaurateurs prices that are higher than they would be if Merchant Link was not involved and if the competitive playing field was level. In addition, the suit claims the tying arrangement allows Chase Paymentech to collect revenue from every credit and debit card transaction that occurs on a MICROS POS system, even when card transactions are processed by a competitor.

The complaint alleges that when selling its POS systems, MICROS (and its dealers) do not disclose all the costs associated with the Merchant Link tie to restaurateurs.  As a result, restaurateurs end up paying inflated costs - with no ability to use alternate vendors.

This press release may contain statements of a forward-looking nature which represent our management's beliefs and assumptions concerning future events. Forward-looking statements involve risks, uncertainties and assumptions and are based on information currently available. Actual results may differ materially from those expressed in the forward-looking statements due to many factors. Information concerning these factors is contained in the company's Securities and Exchange Commission filings, including but not limited to, the company's registration statement on Form 10- K, or Form 10-Q as applicable. They undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

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