Appeals Court Tosses Antitrust Judgment Against American Express -- Update
27 September 2016 - 7:56AM
Dow Jones News
By Christopher M. Matthews and Robin Sidel
A federal appeals court tossed an antitrust judgment against
American Express Co. Monday, ruling the credit card company can bar
merchants from steering customers toward using other credit cards
with lower fees.
The ruling is a significant win for AmEx, which had appealed a
2015 judgment by a Brooklyn U.S. district judge who found
anti-competitive AmEx's policy of not allowing its merchants to
promote other cards.
Last year's ruling, by U.S. District Judge Nicholas Garaufis,
meant that merchants who accept AmEx would be permitted to
encourage customers to use other, potentially cheaper cards, such
as ones that are branded by Visa Inc. and MasterCard Inc. Merchants
also could offer discounts to shoppers for using cards other than
AmEx and post signs that specify which card they prefer.
But the Second U.S. Circuit Court of Appeals said Monday that
the Justice Department didn't prove AmEx agreements with merchants
hurt consumers, including both cardholders and merchants, and the
lower court erroneously focused solely on the damage to
merchants.
"This approach does not advance overall consumer satisfaction,"
the three judge panel wrote in a 66-page opinion. "Though merchants
may desire lower fees, those fees are necessary to maintaining
cardholder satisfaction -- and if a particular merchant finds that
the cost of Amex fees outweighs the benefit it gains by accepting
Amex cards, then the merchant can choose to not accept Amex
cards."
In a statement, AmEx said that the company "is pleased with the
Appellate Court's decision to uphold the Non-Discrimination
Provisions in our merchant contracts," adding that the ruling
"means consumers will be able to choose how they pay and our Card
Members will not be discriminated against at the point of
sale."
A Justice Department spokesman declined to comment.
Write to Christopher M. Matthews at christopher.matthews@wsj.com
and Robin Sidel at robin.sidel@wsj.com
(END) Dow Jones Newswires
September 26, 2016 17:41 ET (21:41 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
American Express (NYSE:AXP)
Historical Stock Chart
From Apr 2024 to May 2024
American Express (NYSE:AXP)
Historical Stock Chart
From May 2023 to May 2024