American Express shares jumped after the Supreme Court sided with it in a credit card fee lawsuit.
In a five to four ruling, the Supreme Court said Amex rules regarding its services for merchants don’t violate federal antitrust law. Shares jumped 2.2 percent.
The case centered on the fees that credit card companies charge retailers for processing transactions. Amex doesn’t allow merchants to offer promotions or discounts on rival cards that charge them lower fees. The government had argued that the practice sticks merchants with higher fees for Amex transactions, which are passed on to consumers whether or not an Amex card is used.
In a statement, an Amex spokesman said, “The Supreme Court’s decision is a major victory for consumers and for American Express. It will help to promote competition and innovation in the payments industry.”
The Retail Litigation Center, a group representing retailers, said in their own statement that the decision was a loss for American consumers. “Competition in the credit card space is sorely lacking. The Court’s decision to uphold the Second Circuit’s misguided approach will allow AmEx to continue to stifle competition and prevent consumers from understanding the cost of rising credit card fees.”
The Justice Department originally brought the case against Amex and its larger rivals Mastercard and Visa. The argument was that merchants had no real bargaining power when it came to using their payment services. A lower court had ruled that Amex’s “anti-steering” rules stifled competition. Mastercard and Visa settled with the government before trial.
An appeals court added a “two-sided” concept that meant the government would have to show that price increases for merchants also harmed cardholders. Amex is a company that serves different sets of customers at the same time, charging merchants who accept its cards as well as the consumers who use them.
Amazon is another company that serves multiple constituencies, connecting buyers and sellers of goods, as is Google with advertisers and search users.