On 25 June 2018, the US Supreme Court held that American Express’s anti-steering provisions do not breach US antitrust law (Ohio et al. v. American Express Co. et al (No. 16–1454).

The US Supreme Court found that the relevant market was a single "two-sided" market covering both sides of the credit card transaction (rather than two separate markets for merchants and credit card holders). The US Department of Justice was concerned that credit card companies were requiring businesses (which accepted their credit cards) not to steer customers toward other cards that cost less for the business to accept.

In defining the relevant market, the Supreme Court found that courts had to include both sides of the platform (i.e. merchants and cardholders) when defining the relevant credit card market. As a result, the effects of the terms on merchants had to also consider the effects on cardholders as well as merchants. Among other reasons for its decision, the Supreme Court found that the claimants had not addressed the claimed anti-competitive effects on this basis.

Credit card networks were regarded as a specific type of two-sided platform known as a "transaction" platform. The ruling will be of interest to other similar "transaction" platforms. However, other types of platforms that may be regarded as two-sided are more focused on advertising-supported services.

The Supreme Court noted that: “A market should be treated as one sided when the impacts of indirect network effects and relative pricing in that market are minor,” and the Supreme Court gave advertising-supported newspapers as a possible example of such a market when it stated that: "Newspapers that sell advertisements, for example, arguably operate a two-sided platform because the value of an advertisement increases as more people read the newspaper. But in the newspaper-advertisement market, the indirect networks effects operate in only one direction [emphasis added]; newspaper readers are largely indifferent to the amount of advertising that a newspaper contains…Because of these weak indirect network effects, the market for newspaper advertising behaves much like a one-sided market and should be analyzed as such [emphasis added]".

The Competition and Consumer Protection Commission (CCPC) has had to assess two-sided markets in a number of media merger determinations and in an enforcement decision under the Competition Act 2002.

  • In the acquisition by Bay Broadcasting of Radio Nova (M/17/056), the CCPC stated in relation to the sale of radio advertising in Co. Dublin that "Any assessment of the nature of competition between radio stations requires a consideration of the interaction between advertisers and listeners. This type of assessment is typically carried out in the context of a two-sided market analysis. In a two-sided market, two groups interact through a particular medium (e.g., a radio station) that enables them to achieve inter-related objectives." In the newspaper acquisition by INM of CMNL (M/16/044), the CCPC stated that: "As such, an assessment of the nature of competition in newspaper markets requires a consideration of the interaction between advertisers and readers. This type of assessment is carried out typically in the context of a two-sided market analysis. In this instance, newspapers wish to attract advertisers on one side and readers on the other side of the market to form an audience for these advertisers".
  • In the competition law enforcement action regarding broadcasting (i.e. RTÉ’s conduct in the market for television advertising - Enforcement Decision E/12/001), the CCPC stated that: "First, broadcasting is a two-sided market. On one side of the market broadcasters attract viewers with programming. On the other side of the market, broadcasters attract advertisers based on their viewership".

Whether the analysis carried-out by the Supreme Court in relation to transaction platforms finds favour in Ireland (and across the EU more generally) remains to be seen though the Amex case raises issues regarding the nature of transaction platforms and how such effects are to be assessed by competition regulators in two-sided markets.