Appeals Court Rules for American Express in Antitrust Case

Appeals Court Rules for American Express in Antitrust Case

September 29, 2016         Written By John H. Oldshue

A federal appeals court ruled on Monday that American Express did not violate antitrust laws when they banned merchants from steering customers away from paying with AmEx.

The fees paid to process card transactions are a significant cost to merchants and were central to the case. Merchants sometimes encourage customers to use a rival card that charges a lower transaction fees, and at one time, American Express, Visa and MasterCard all had rules against this practice. That changed in 2010 when the U.S. government and 17 states filed a lawsuit against the three companies that argued letting merchants steer customers to credit cards with lower merchant fees would benefit consumers.

In 2011, Visa and MasterCard entered into consent judgments and ended anti-steering rules. But American Express proceeded to trial. Last year, Judge Nicholas Garaufis of the U.S. District Court for the Eastern District of New York ruled against American Express, saying anti-steering rules were “an unlawful restraint on trade.”

But on Monday, the 2nd Circuit Court of Appeals in Manhattan said the erroneous lower-court ruling focused solely on merchant interests over cardholders. The court further ruled that American Express seems to get its market share based on rewards programs and prestige, and “there is no reason to intervene and disturb the present functioning of the payment-card industry.” The court believed that ruling against American Express would only increase the market shares of Visa and MasterCard.

The appeals court said one third of the nation’s merchants do not accept American Express. For those that do accept the card, the court ruled that steering customers away from the card at checkout out is wrong because a merchant can entice “high-end clientele by advertising acceptance of Amex cards but then, at the critical point of sale, offering that clientele a discounted price for not using the Amex card.”

“In this case, we see no monopolistic danger in this purpose,” the 2nd Circuit said.

The information contained within this article was accurate as of September 29, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About John H. Oldshue

John Oldshue is the creator of He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for
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