Supreme Court Sides With American Express on Merchant Fees

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In a test of antitrust law, the Supreme Court ruled 5 to 4 that American Express could use contracts to stop merchants from steering consumers to other cards. The decision has implications not only for what one brief called “an astronomical number of retail transactions” but also for other kinds of markets, notably ones on the internet, in which services link consumers and businesses. Such “two-sided platforms,” the Court said, require special and seemingly more forgiving antitrust scrutiny. Justice Clarence Thomas, writing for the majority, said the specialized nature of credit-card transactions justified what in other circumstances might have been anti-competitive conduct. Credit card networks create “two-sided platforms,” Justice Thomas wrote, and they “differ from traditional markets in important ways.” Since card companies deal with both merchants and consumers, he wrote, people challenging actions as anticompetitive must take account of the effect on both sets of market participants. Viewed that way, Justice Thomas wrote, American Express promoted competition by designing rewards programs to attract affluent customers.

Justice Stephen G. Breyer read his dissent from the bench, a rare move indicating profound disagreement. He said the implications of the ruling were vast and could hurt competition in many realms. “I particularly fear the interpretive impact of the majority’s discussion of what it calls ‘two-sided platforms,’ in an era when that term might be thought to apply to many internet-related goods and services that are becoming ever more important,” Justice Breyer said.


Supreme Court Sides With American Express on Merchant Fees