Top Court to Review Challenge to AmEx -- WSJ
October 17 2017 - 03:02AM
Dow Jones News
By AnnaMaria Andriotis and Brent Kendall
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 17, 2017).
WASHINGTON -- The Supreme Court intervened in a high-stakes case
for the credit-card industry Monday, saying it will review a
government antitrust challenge to American Express Co. rules that
bar merchants from steering customers to cards that charge lower
fees.
The court's move marks the latest turn in a long-running
antitrust case against the credit-card giant. At issue are the fees
that AmEx charges merchants when consumers use its cards at their
stores. AmEx's card policy says that merchants that choose to
accept AmEx cards can't steer consumers to use cards on other
networks, like Visa or Mastercard.
Federal and state antitrust enforcers have argued the AmEx rules
are an unlawful restraint on trade. AmEx disputes the allegations
and says its rules are good for cardholders.
The company appeared to have the upper hand in the litigation
last year after winning a major decision from the Second U.S.
Circuit Court of Appeals in New York. That ruling reversed a trial
judge who said AmEx violated U.S. antitrust law because it didn't
allow stores that accept AmEx cards to encourage shoppers to use
cheaper cards.
"The earlier decision by the Second Circuit panel protects a
consumer's right to choose how they pay, prevents our card members
from being discriminated against and promotes competition in the
payments industry, " a spokesman for AmEx said in a statement.
"With the Supreme Court's decision to take up this case, we will
continue to vigorously defend the Second Circuit's decision in
favor of American Express."
Retailers and states praised the Supreme Court's decision.
"Retailers have long said AmEx's rules are an antitrust violation
that deny consumers truthful information about their credit cards,"
according to a statement Monday from the Retail Litigation
Center.
"The issues in this appeal involve anticompetitive practices
that hinder Ohio consumers and Ohio retailers and merchants. We
look forward to making our arguments before the court," Ohio
Attorney General Mike DeWine said.
The Justice Department first sued AmEx in 2010, one of the early
headline cases for U.S. antitrust enforcers in the Obama
administration. The Trump Justice Department, however, took a
different tack and chose not to continue the fight. It declined to
seek Supreme Court review and urged the justices not to consider
the ongoing appeal by attorneys general from 11 states, led by
Ohio.
Trump officials said the appeals court made errors in ruling for
AmEx, but nevertheless said the case didn't merit high court
review. The states disagreed, arguing the case deserved the Supreme
Court's attention.
The justices agreed with the states. In a brief written order
issued Monday, they said they would hear the case. Oral arguments
are expected early next year and a decision is expected by the end
of June.
AmEx shares fell more than 1% Monday after the Supreme Court's
announcement.
The stakes are high for AmEx. The fees it charges retailers are
often higher than for other cards. Some merchants choose not to
accept AmEx cards as a result.
AmEx in recent years has been working on raising its merchant
acceptance in part by lowering its so-called swipe fees. Still, a
ruling against the company's current policy could lessen the number
of AmEx card transactions and related revenue. AmEx has said in
recent securities filings that losing the case could have a
material adverse effect on its business.
Visa and Mastercard settled similar government antitrust claims
in 2010, agreeing to drop their policies that barred merchants from
using discounts, rebates or other incentives to encourage customers
to pay with cheaper cards.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and
Brent Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
October 17, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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