Legal Seminar, Denver, CO

Supreme Court: AmEx Anti-Steering Provisions Not Anticompetitive

• In. Ohio v. American Express Co. , the Supreme Court held that AmEx’s anti-steering contract provisions, which forbid merchants that accept AmEx cards from steering customers towards using other cards with lower rates, do not violate Section 1 of the Sherman Act. • Antitrust Treatment of Two-Sided Platform Markets • The Court defined two-sided platform markets as those that offer different products or services to two different groups who both depend on the platform to connect them. • The majority found that platform markets must be analyzed differently than traditional markets under the Sherman Act, with effectively a higher standard of evidence that requires a showing of harm on both sides of the platform. • Relevant Market • The Court defined the relevant market as including both sides of the two-sided platform for credit card services. For this platform to succeed, both consumers and merchants must participate in the transaction. • Anticompetitive Effects • The Court held that the plaintiffs failed to show that the anti-steering provisions caused anticompetitive effects in the credit card transaction market • For the plaintiffs to have successfully proven anticompetitive effects, the Court held that they had to show the contract provisions either: • Increased the cost of credit card transactions above competitive level • Reduced the number of credit card transactions • Stifled competition in the two-sided credit card market.

Dissent

• Writing for the dissent and joined by Justices Ginsburg, Sotomayor, and Kagen, Justice Breyer argued that: • The market definition should be two separate, complementary markets subject to the traditional rule-of-reason framework. The dissent argued that there was no sound reason to treat two-sided platform markets differently under the antitrust laws. • Market definition is not necessary where a plaintiff has direct evidence of anticompetitive harm, because the direct evidence itself proves market power. • The majority ignored the plaintiffs' evidence of anticompetitive effects, particularly with respect to Discover, and overlooked the detailed factual findings of the trial court. • The majority incorrectly relied on evidence of overall increasing output to disregard the plaintiffs' evidence that net prices had increased due to AmEx’s anti-steering provisions. The relevant economic question is instead whether output is higher or lower than it would have been absent the anti-steering provisions, which courts cannot expect plaintiffs to prove. • The majority's definition of two-sided platform markets is not meaningful and could include everything from farmers' markets to internet retailers.