American Express Co.’s (NYSE:AXP) policy of preventing merchants from offering customers incentives to pay with cheaper cards does not violate antitrust laws, the US Supreme Court ruled Monday.
The vote was 5 to 4, with the court’s more conservative members in the majority. Justice Clarence Thomas, writing for the majority, said the specialized nature of credit-card transactions justified what in other circumstances might have been anti-competitive conduct.
The Supreme Court justice said government enforcers focused too narrowly on the swipe-fees that merchants must pay to AmEx when customers pay with a card.
Bolsters AmEx business model
The ruling removed a major threat to AmEx after nearly a decade of litigation.
“An AmEx loss would have given merchants significant leverage against the company because they could have asked consumers to pay with other lower-fee cards in exchange for discounts or other incentives,” said a Wall Street Journal report.
More significantly, the ruling is also a setback for the merchants’ broader ambitions to take on credit card swipe-fees, also known as interchange fees.
Contact Uttara Choudhury at uttara@proactiveinvestors.com
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