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Under their contracts, merchants who accept American Express generally can not encourage customers to use other credit cards. Even Visa and MasterCard generally charge merchants cheaper. But American Express prevents merchants who accept his card from offering customers discounts or other incentives to use other cards or to express a preference for other cards. The federal government and a group of states filed lawsuits against alleged American Express antitrust provisions, arguing that they violated federal law.
American Express has defended its practices. The Supreme Court noted that the company has traditionally charged higher fees to traders than to competitors because it offers richer cardholders who spend more money. American Express uses its higher fares to offer its holders better rewards.
On Monday, the high court ruled 5-4 in favor of American Express, allowing it to continue to prevent merchants from directing customers to cards with lower fees.
"In this case, we must decide whether Amex's anti-terrorism provisions violate the federal antitrust law and we conclude that they are not," Justice Clarence Thomas wrote in an opinion for himself and his Conservative colleagues, Chief Justice John Roberts and Justices Anthony Neil Gorsuch. Thomas said: "The Amex business model has boosted interbrand competition and has increased the quality and quantity of credit card transactions."
American Express applauded the decision in a brief statement after its announcement.
"The Supreme Court's decision is a big win for consumers and for American Express, as it will help promote competition and innovation in the payments industry," the statement said.
Judge Stephen Breyer, who taught antitrust law at Harvard University, wrote a dissenting opinion for himself and three Liberal colleagues, Judges Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan. Breyer, who took the unusual step of reading a summary of his dissent from the bench, said the court's decision was "contrary to the basic principles of antitrust law".
The retail industry also expressed dissatisfaction with the decision. "Today's decision undermines competition and transparency in the credit card market," said Stephanie Martz, General Counsel for the National Retail Federation, in a statement. "The American Express rules in question consisted of a gag order on retailers' ability to educate their customers on how high sweeping costs drive up the price of goods."
The case tried by the Supreme Court dates back to 2010 when the Obama administration and more than a dozen states sued American Express as well as Visa and MasterCard, which had similar rules. Visa and MasterCard have agreed to change their practices. American Express has decided to go to trial. The company accounts for about a quarter of the US credit card market, measured by the volume of transactions and has approximately 50 million cards in circulation in the United States.
A federal court judge initially ruled against American Express. In examining the effect of American Express rules on merchants, she found that the rules stifled competition between credit card companies and resulted in higher fees for merchants and higher prices. for consumers. A court of appeal overturned the ruling, ruling for American Express. He said that the effect of the rules on merchants and cardholders should be taken into account. The Supreme Court accepted and concluded that American Express's "anti-pilotage provisions" did not unreasonably restrict trade.
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