Several retailer merchant plaintiffs (MPs) are headed to trial against American Express (Amex) claiming Amex’s use of an anti-steering rule in their contracts violates US antitrust law and after having three of the four the relevant markets outlined in their suits rejected by the district Judge. On Monday, January 14, US District Judge Nicholas Garaufis of the Eastern District of New York granted Amex’s motion for partial summary judgment.
The MPs allege that the anti-steering rule prevents them from setting different prices for different credit cards, stating a preference for a particular type of payment, or using different payment terms for different cards.
The merchants claim the restraints “nullify the operation of the price mechanism, impede competition among credit card networks and suppress output.” As a result, the MPs allege, “merchant fees and the net two-sided transaction price for Amex and other credit card networks are higher than the competitive level and higher than they otherwise would be in the absence of Amex’s anticompetitive restraints [and] the number of credit card transactions is lower than it otherwise would be in the absence of the Amex restraints.”
The MPs had “sought to proceed to trial with respect to four formulations of the relevant market: 1) a one-sided, all-general purpose credit (“GPCC”) card market; 2) a one-sided, Amex-only market; 3) a two-sided, all-GPCC market; and 4) a two-sided, Amex-only market.”
Amex’s motion for summary judgment asked the court whether three of the MPs’ four proposed market definitions could succeed as a matter of law (Amex did not move for summary judgment as to the MPs’ two-sided, all-GPCC market definition). The court agreed that these three market definitions could not succeed as a matter of law.
Judge Garaufis concluded, “Because the MPs cannot define a single-brand market without reference to the contractual restraints at issue in this case, and because the MPs have not made a legally permissible allegation that Amex possessed pre-contract market power that compelled acceptance of the NDPs, the MPs’ Amex-only market fails as a matter of law. Accordingly, the court grants Amex’s motion for summary judgment as to the MPs’ Amex-only market allegations.”