Monday, April 10, 2006

Big Oil, Tobacco and The Banks Have Much in Common (

Big Oil, tobacco and the banks have much in common.

Whether it is a film about a utility company, like Erin Brockovich, or Syriana, about big oil, or even the recent "Thank You For Smoking" satire about the tobacco industry, there are lessons that Visa ® and MasterCard® might just follow.

"Thank You For Smoking" is a story about the tobacco industry's slick media hack who is one of the most hated people in the nation. His goal in this comedy is to spin cigarettes and make something that kills millions of people attractive and necessary.

What do tobacco and credit credits have in common? Both engage in massive PR and both faced billions of dollars in litigation. The former lost and explained that to pay hundreds of billions would destroy the industry. As we now know, the companies are still thriving and to afford the penalties, they raised the cost for a pack of cigarettes. In a parallel move, when Visa® and MasterCard® agreed to pay three billion dollars to settle an earlier antitrust suit, the banks explained that any larger fee would financially damage them. Then, like big tobacco, they agreed to pay - over ten years and funded the settlement with ... higher interchange fees.