On February 19, a federal judge ruled that American Express Co.’s anti-steering rules, which prevent merchants from encouraging their consumers to use other credit card brands, violate the antitrust laws. The case was filed in 2010 by the Department of Justice (DOJ) and attorneys general of 17 states.
Whenever a customer uses a credit card, the merchant pays a fee to the network services provider that facilitates the customer’s purchase, and American Express rules prohibit merchants from encouraging customers to use credit cards that cost the merchant less to accept. To the court, in a competitive environment, a particular merchant may prefer that a customer who had both an American Express card and another brand of credit card use the other brand of card if the cost of the transaction would be lower for the merchant. Accordingly, the court held that the rules were anticompetitive.
The judge gave American Express 30 days to meet with the DOJ and reach an agreement on modified rules that would strike the appropriate balance between protecting American Express’s legitimate interests and the public’s interest. As of March 23, 2015, the parties disagreed as to the proper balance to be struck and submitted differing proposals to the court on the rules.