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Supreme Court Rules in Favor of American Express in Antitrust Case
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Summary: The Supreme Court ruled in favor of American Express in an antitrust lawsuit on Monday. 

On Monday, the Supreme Court ruled in favor of American Express in an antitrust case that Vox said could make “it extraordinarily more difficult for the government to rein in certain companies that abuse their market power.”

  
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The case involved American Express and its rule for merchants who use its cards. All merchants who use credit cards must pay a fee, and American Express stipulates in its contracts that merchants who accept American Express can not encourage their customers to use other credit cards, which have cheaper fees. This practice is called antisteering.

American Express opponents said that this rule causes prices to raise at businesses because they end up paying more to use American Express.

American Express said that they charge higher fees because their clients tend to be wealthier who spend more money and that this spending power is a value to merchants. They stated that they charge higher merchant fees because they give more perks to their users.

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On Monday, the Supreme Court ruled 5-4 in favor of American Express, and Justice Clarence Thomas wrote the opinion for himself, Chief Justice John Roberts, Justice Anthony Kennedy, Justice Samuel Alito and Justice Neil Gorsuch.

“In this case, we must decide whether Amex’s antisteering provisions violate federal antitrust law. We conclude they do not,” Justice Thomas wrote. “Amex’s business model has spurred robust interbrand competition and increased the quality and quantity of credit-card transactions.”



After the decision was announced, American Express said that the decision was “a major victory for consumers and for American Express. It will help to promote competition and innovation in the payments industry.”

Justice Stephen Breyer, Justice Ruth Bader Ginsburg, Justice Sonia Sotomayor, and Justice Elena Kagan were a part of the dissent.

According to Yahoo, the retail industry was unhappy with the ruling, calling it a “blow.”

“Today’s ruling is a blow to competition and transparency in the credit card market,” National Retail Federation general counsel Stephanie Martz said. “The American Express rules in question have amounted to a gag order on retailers’ ability to educate their customers on how high swipe fees drive up the price of merchandise.”

Monday’s case started in 2010 when President Barack Obama’s administration and almost a dozen states sued American Express and other credit cards for antisteering rules in their contracts. Visa and Mastercard agreed to change their practices, but American Express fought the case until it made it to the Supreme Court.

The four major credit cards are Visa, Mastercard, American Express, and Discover. Vox said that with Monday’s ruling it will make it harder for competitors to enter the marketplace, and this antisteering practice may permeate in other industries.

What do you think of the antitrust ruling? Let us know in the comments below.



 

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