U.S. Supreme Court
Posted June 25, 2018, 3:27 pm CDT
A provision in American Express contracts that banned merchants from steering customers to competitor credit cards with lower merchant fees did not violate antitrust law, the U.S. Supreme Court has decided.
The court ruled 5-4 Monday for American Express in an antitrust challenge brought by the U.S. Justice Department and 17 states. Justice Clarence Thomas wrote the majority opinion, joined by Chief Justice John G. Roberts Jr., Anthony M. Kennedy, Samuel A. Alito Jr. and Neil M. Gorsuch.
Thomas said the plaintiffs had failed to prove that the contract provision has anticompetitive effects. The plaintiffs had focused their case on proving that the agreements increase merchant fees, but they failed to address the impact on consumers, Thomas said.
There was no showing that the provisions stifled competition, Thomas wrote: “To the contrary, while these agreements have been in place, the credit-card market experienced expanding output and improved quality.”
American Express receives most of its revenue from merchant fees, while Visa and MasterCard earn half their revenue by collecting interest from cardholders, Thomas pointed out. American Express encourages spending by providing better rewards than its competitors. To compete, Visa and MasterCard have introduced premium cards that charge merchants higher fees and offer better rewards.
To win their cases, Thomas said, the plaintiffs would have to show that the contract provision “increased the cost of credit-card transactions above a competitive level, reduced the number of credit-card transactions, or otherwise stifled competition in the credit-card market. …. They failed to do so.”
In a dissent, Justice Stephen G. Breyer said the American Express contract term “has serious anticompetitive effects.” His dissent was joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.
The case is Ohio v. American Express.
Be Sociable, Share!