Working Paper No. 06-25:
MasterCard's Single Entity Strategy
Date Posted: 2006
This comment is a response to Professor Fleischer's analysis of the MasterCard IPO prepared for the Harvard Negotiation Law Review symposium. Professor Fleischer's analysis of the MasterCard IPO suggests that the adoption of this particular deal structure was driven not by transactions costs, but branding considerations and antitrust exposure. Fleischer identifies two features of the MasterCard IPO as particularly responsive to both branding and potential antitrust liability: (1) the "reverse" dual-class voting structure and (2) the charitable foundation. Fleischer correctly points out the proposed structure would reduce potential antitrust exposure by decreasing the merchant banks' control over pricing decisions and highlights an important and underappreciated relationship between antitrust rules and corporate structure. This comment supplements Fleischer's analysis of the antitrust implications of MasterCard's new governance structure. Part I summarizes the antitrust environment facing the cooperative networks serving MasterCard and Visa. Part II considers the antitrust implications of MasterCard's new organizational structure and Part III concludes with some thoughts regarding what the MasterCard IPO tells us about the role of lawyer in dealmaking.