Major U.S. credit card issuers won a significant legal victory following a decision by an appeals court rejecting a challenge to mandatory arbitration clauses in credit card agreements. At the trial court level, consumer groups asserted claims against several major credit card issuers, arguing that they colluded to violated antitrust laws when their leaders openly met to discuss implementation of mandatory arbitration clauses during the period from 1999 through 2003. The consumer groups argued that the issuers violated the Sherman Act by meeting on more than 25 occasions to coordinate on mandatory arbitration clauses contained in their cardholder agreements. Among other things, Section 1 of the Sherman Act prohibits agreements that affect interstate commerce that unreasonably restrain competition. At the trial court level, U.S. District Judge William Paul concluded that the parallel action of banks to include mandatory provisions did not amount to unlawful collusion in violation of the Sherman Act. Although the trial court found that parallel action existed, it ultimately determined by only a “slender reed” that the issuer’s actions were undertaken individually, and not in collusion with each other. On appeal, the Second Circuit Court of Appeals affirmed the trial court’s judgment in favor of the credit card issuers, noting that the trial court’s factual determinations were not clearly erroneous.

Read more about this development here and the case here.