Goldman, NCAA Test Limits of AmEx Two-Sided Antitrust Defense

By Victoria Graham, Bloomberg

Goldman Sachs & Co., Delta Dental Insurance Co., and the NCAA have all turned to the same legal theory to fend off antitrust claims tied to a 2018 U.S. Supreme Court ruling.

The two companies and nonprofit collegiate sports body all argue that they serve two or more distinct, but interrelated, markets. That designation shields them from a straightforward antitrust analysis and places a higher burden on plaintiffs to prove anti-competitive harm under the Supreme Court’s June 2018 ruling in favor of American Express Co.

Some defendants may be overdoing it with the suddenly popular defense, attorneys say.

“Just because someone is saying they’re a two-sided market doesn’t mean they are one,” John Roberti, an antitrust partner at Allen & Overy LLP, said.

Amex Decision

In June 2018, the Supreme Court ruled 5-4 that American Express’s anti-steering provisions, which prohibited merchants from offering customers lower fee credit cards, don’t violate antitrust laws.

The states, which first brought the suit in 2010, failed to prove that both sides of the two-sided market American Express serves—merchants and consumers—were hurt by such anti-steering provisions.

Dozens of companies have since seized on the decision to claim that they deserve similar deference under antitrust law.

Goldman, Barclays Capital Inc., and more than a dozen other top investment banks say they are a two-sided market that serves investors and government sponsored housing enterprises, like Fannie Mae. Such a defense was made in a suit that accuses the banks of conspiring to rig mortgage bonds.

Delta Dental says it’s covered by the AmEx decision because it connects two sets of customers—patents and dentists. That claim was made in a suit against Delta Dental and its affiliates who are said to have illegally monopolized the insurance market in several parts of the country.

It’s not just companies. The NCAA has arguedit’s a two-sided exchange that serves both athletes and consumers who watch sporting events in response to an antitrust lawsuit filed by a group of former college athletes.

“You are seeing folks trying to use the AmEx opinion to their advantage, and trying to call their market a two-sided market that should be shielded by the Supreme Court’s ruling,” Sharis Pozen, an antitrust partner at Clifford Chance LLP, said.

Continue Reading…