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<p style="margin-top: 18px; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2"><b>Note 20. Obligations Under Litigation Settlements </b></font></p>
<p style="margin-top: 6px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">On October 27, 2008, MasterCard and Visa Inc. ("Visa") entered into a settlement agreement (the "Discover Settlement") with Discover Financial Services, Inc. ("Discover") relating to the U.S. federal antitrust litigation amongst the parties. The Discover Settlement ended all litigation among the parties for a total of $<font class="_mt">2.75</font> billion. In July 2008, MasterCard and Visa had entered into a judgment sharing agreement that allocated responsibility for any judgment or settlement of the Discover action among the parties. Accordingly, the MasterCard share of the Discover Settlement was $<font class="_mt">863</font> million, which was paid to Discover in November 2008. In addition, in connection with the Discover Settlement, Morgan Stanley, Discover's former parent company, paid MasterCard $<font class="_mt">35</f
ont> million in November 2008, pursuant to a separate agreement. The net impact of $<font class="_mt">828</font> million is included in litigation settlements for the year ended December 31, 2008. </font></p>
<p style="margin-top: 12px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">On June 24, 2008, MasterCard entered into a settlement agreement (the "American Express Settlement") with American Express Company ("American Express") relating to the U.S. federal antitrust litigation between MasterCard and American Express. The American Express Settlement ended all existing litigation between MasterCard and American Express. Under the terms of the American Express Settlement, MasterCard is obligated to make 12 quarterly payments of up to $<font class="_mt">150</font> million per quarter beginning in the third quarter of 2008. MasterCard's maximum nominal payments will total $<font class="_mt">1.8</font> billion. The amount of each quarterly payment is contingent on the performance of American Express's U.S. Global Network Services business. The quarterly payments will be in an amount equal to <font class="_mt">
15</font>% of American Express's U.S. Global Network Services billings during the quarter, up to a maximum of $150 million per quarter. If, however, the payment for any quarter is less than $150 million, the maximum payment for subsequent quarters will be increased by the difference between $<font class="_mt">150</font> million and the lesser amount that was paid in any quarter in which there was a shortfall. MasterCard assumes American Express will achieve these financial hurdles. MasterCard recorded the present value of $1.8 billion, at a <font class="_mt">5.75</font>% discount rate, or <font style="font-family: Times New Roman;" class="_mt" size="2">$<font class="_mt">1.6</font> billion </font>for the year ended December 31, 2008. As of December 31, 2010, the Company has two quarterly payments for a total of $<font class="_mt">300</font> million remaining. </font></p>
<p style="margin-top: 12px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">In 2003, MasterCard entered into a settlement agreement (the "U.S. Merchant Lawsuit Settlement") related to the U.S. merchant lawsuit described under the caption "U.S. Merchant and Consumer Litigations" in Note 22 (Legal and Regulatory Proceedings) and contract disputes with certain customers. Under the terms of the U.S. Merchant Lawsuit Settlement, the Company was required to pay $<font class="_mt">125</font> million in 2003 and $<font class="_mt">100</font> million annually each December from 2004 through 2012. On July 1, 2009, MasterCard entered into an agreement (the "Prepayment Agreement") with plaintiffs of the U.S. Merchant Lawsuit Settlement whereby MasterCard agreed to make a prepayment of its remaining $<font class="_mt">400</font> million in payment obligations at a discounted amount of $<font class="_mt">3
35</font> million on September 30, 2009. The Company made the prepayment at the discounted amount of $335 million on September 30, 2009, after the Prepayment Agreement became final. In addition, in 2003, several other lawsuits were initiated by merchants who opted not to participate in the plaintiff class in the U.S. merchant lawsuit. The "opt-out" merchant lawsuits were not covered by the terms of the U.S. Merchant Lawsuit Settlement and all have been individually settled. </font></p>
<div>
<p style="margin-top: 12px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">We recorded liabilities for these and certain litigation settlements in 2010 and prior years. Total liabilities for litigation settlements changed from December 31, 2008, as follows: </font></p>
<p style="margin-top: 0px; margin-bottom: 0px; font-size: 12px;"> </p>
<table border="0" cellspacing="0" cellpadding="0" width="84%" align="center">
<tr><td width="86%"> </td>
<td valign="bottom" width="9%"> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr><td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-family: Times New Roman;" class="_mt" size="1"><b>(in millions)</b></font></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance as of December 31, 2008</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">1,736</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Interest accretion on U.S. Merchant Lawsuit Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">21</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Interest accretion on American Express Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">66</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Payments on American Express Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(600</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">) </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Payment on U.S. Merchant Lawsuit Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(335</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">) </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Gain on prepayment of U.S. Merchant Lawsuit Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(14</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">) </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other payments, accruals and accretion, net</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(4</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">) </font></td></tr>
<tr style="font-size: 1px;"><td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom"> </td>
<td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom"> </td>
<td> </td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance as of December 31, 2009</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">870</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Interest accretion on American Express Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">35</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Payments on American Express Settlement</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(600</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">) </font></td></tr>
<tr bgcolor="#cceeff"><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Other payments, accruals and accretion, net</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2">) </font></td></tr>
<tr style="font-size: 1px;"><td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom"> </td>
<td style="border-top: rgb(0,0,0) 1px solid;" valign="bottom"> </td>
<td> </td></tr>
<tr><td valign="top">
<p style="text-indent: -1em; margin-left: 1em;"><font style="font-family: Times New Roman;" class="_mt" size="2">Balance as of December 31, 2010</font></p></td>
<td valign="bottom"><font class="_mt" size="1"> </font></td>
<td valign="bottom"><font style="font-family: Times New Roman;" class="_mt" size="2">$</font></td>
<td valign="bottom" align="right"><font style="font-family: Times New Roman;" class="_mt" size="2">302</font></td>
<td valign="bottom" nowrap="nowrap"><font style="font-family: Times New Roman;" class="_mt" size="2"> </font></td></tr>
<tr style="font-size: 1px;"><td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="border-top: rgb(0,0,0) 3px double;" valign="bottom"> </td>
<td style="border-top: rgb(0,0,0) 3px double;" valign="bottom"> </td>
<td> </td></tr></table>
<p style="margin-top: 12px; text-indent: 4%; margin-bottom: 0px;"><font style="font-family: Times New Roman;" class="_mt" size="2">See Note 22 (Legal and Regulatory Proceedings) for additional discussion regarding the Company's legal proceedings.</font></p></div> </div>Note 20. Obligations Under Litigation Settlements
On October 27, 2008, MasterCard and Visa Inc. ("Visa") entered into a settlement agreement (thefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringLitigation Settlements DisclosureNo authoritative reference available.falsefalse12Obligations Under Litigation SettlementsUnKnownUnKnownUnKnownUnKnownfalsetrue
