Justice Dept. Drops AmEx Antitrust Case

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By Liz Crampton

The Justice Department on June 2 declined to ask the U.S. Supreme Court to review its antitrust case against American Express Co.

The decision means that, for now, American Express can continue its practice of asking merchants not to direct customers to lower-priced credit cards.

The DOJ’s decision to abandon the case doesn’t preclude the 18 states that signed onto the government’s suit from asking for high court review. But American Express said in a statement the DOJ’s decision not to pursue the case “sends a strong signal” that the litigation should end. The states have until midnight June 2 to file a request.

Without a Supreme Court review, key questions about a relatively new legal theory remain unanswered. John Briggs, an antitrust partner at the Washington law firm Axinn, Veltrop and Hartrider, said he was surprised by the DOJ’s decision. “This is a case that was crying out for a Supreme Court decision,” he told Bloomberg BNA.

The antitrust legal community wants clarification on whether enforcers need to separately analyze both sides of a two-sided market where a company receives revenues from separate groups. American Express receives revenue from both card holders and merchants.

“This is the first two-sided market case in the history of law,” Briggs said. “I don’t see another two-sided market case coming along soon. Kicking the can down the road just leaves us where we are here.”

The DOJ didn’t challenge an appellate court ruling that the government improperly analyzed the credit-card market in bringing the lawsuit. The U.S. Court of Appeals for the Second Circuit’s decision also dealt blow to the DOJ’s long record of wins. The court said the Justice Department should have considered how both merchants and consumers are affected by AmEx’s rules. The case began in 2010 when the government accused American Express of illegally imposing rules on merchants keeping them from steering customers to lower priced options.

The government ran up to the deadline to file for Supreme Court review after exhausting all available extensions. Staff had twice requested more time to file a writ of certiorari to allow new leadership to get in place. Makan Delrahim, nominee to lead the antitrust division, is still awaiting Senate confirmation.

Briggs noted that Visa Inc. and Mastercard Inc. settled similar charges in 2015. “I would think that a Justice Department neutral on competition would like to get a Supreme Court ruling,” he said.

To contact the reporter on this story: Liz Crampton in Washington at lcrampton@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

For More Information

The text of the Second Circuit decision is at http://src.bna.com/pmB

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