US judge rules AmEx limits on stores anti-competitive

GMT 20:06 2015 Thursday ,19 February

Arab Today, arab today US judge rules AmEx limits on stores anti-competitive

A US judge rules that American Express
New York - AFP

A US judge Thursday ruled that American Express policies barring merchants from steering customers to lower-cost credit cards results in higher prices and violates antitrust law.
US District Judge Garaufis concluded that the US credit-card giant crossed a line in barring some 3.4 million merchants who accept its cards from steering customers to other credit card brands that charge merchants less for transactions.
The ruling hands a victory to US and state officials in the five-year-old case.
Because of AmEx's extensive market penetration among retailers and the high cost of entry to the credit-card business, AmEx has "the power to repeatedly and profitably raise their merchant prices without worrying about significant market attrition" from merchants who dump the card, Garaufis said.
In addition, the judge found evidence that AmEx's actions had real effects on consumers, noting that merchant prices have "risen dramatically" as a result of the company's anti-steering policies.
Garaufis said he would consider a remedy for the violation following additional legal briefing by both sides.
The decision marks a victory for the Justice Department and 17 states, which in 2010 sued AmEx, Visa and MasterCard, challenging each company's anti-steering rules. The other two credit-card companies settled, but AmEx opted to fight the case.
Garaufis oversaw a seven-week bench trial, which excludes a jury, that ended in August 2014. Witnesses from major credit card companies and nearly 20 merchants testified in the trial.
AmEx said it would appeal the ruling "at the appropriate time."
"Today's decision would harm competition by further entrenching the two dominant payment networks, Visa and MasterCard," AmEx said.
"Only a small percentage of Visa and MasterCard holders carry American Express cards. By contrast, most American Express Card Members carry a competing card in their wallet. Today's decision means merchants would be able to steer customers to use Visa and MasterCard, while it would be virtually impossible to steer away from them."
Dow member AmEx fell 2.7 percent to $77.61 in midday trade.


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