Ohio v. American Express Co.
138 S. Ct. 2274
| SCOTUS | 2018Background
- American Express (Amex) operates a two-sided "transaction" platform connecting merchants and cardholders; it charges merchants higher fees to fund cardholder rewards that drive spending.
- Amex’s merchant contracts include antisteering ("nondiscrimination") provisions that bar merchants from discouraging customers from using Amex cards at point of sale.
- United States and several States sued Amex under §1 of the Sherman Act, arguing the antisteering provisions suppress merchant-side competition and raise merchant fees.
- District Court ruled for plaintiffs, treating merchant and cardholder markets separately and finding anticompetitive effects; the Second Circuit reversed, holding the credit-card market is one two-sided market and Amex’s provisions do not violate §1.
- Supreme Court affirmed the Second Circuit: applied the rule of reason, held the relevant market is the two-sided market for credit-card transactions, and found plaintiffs failed to show anticompetitive effects across the two-sided market.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper market definition for rule-of-reason analysis | Market is two separate sides; plaintiffs focused on merchant side to show harm | Market is a single two-sided transaction market including both merchants and cardholders | Market is one two-sided transaction market and both sides must be considered |
| Whether antisteering provisions had substantial anticompetitive effect | Antisteering prevented merchants from steering, enabled Amex to raise merchant fees and reduced competition | Fee differences reflect legitimate price structure of two-sided platform (rewards vs. merchant fees); antisteering prevents externalities and promotes interbrand competition | Plaintiffs failed to show anticompetitive effects in the two-sided market; merchant-fee increases alone insufficient |
| Whether plaintiffs proved market power or supracompetitive transaction prices | Price increases on merchant side show Amex exercised market power | Must show transaction price (net across both sides) exceeded competitive level or output was reduced | No evidence that transaction price was above competitive level or that output declined; output increased during period cited |
| Whether antisteering provisions are inherently unlawful or procompetitive | Procompetitive justifications do not offset harm to merchant-side competition | Procompetitive: prevent negative externalities (undermine "welcome acceptance"), protect investments in rewards, promote interbrand competition | Provisions are not inherently anticompetitive; plaintiffs did not meet burden to show unlawful restraint under rule of reason |
Key Cases Cited
- State Oil Co. v. Khan, 522 U.S. 3 (rule-of-reason framing for unreasonable restraints)
- Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717 (distinguishing per se vs. rule-of-reason restraints)
- Indiana Federation of Dentists v. FTC, 476 U.S. 447 (direct evidence of detrimental effects can obviate market-power inquiry)
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (do not infer competitive injury from price/output data absent evidence of restricted output or supracompetitive price)
- United States v. Grinnell Corp., 384 U.S. 563 (market definition tied to commercial realities)
- Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (vertical restraints analyzed under rule of reason)
- Times-Picayune Publishing Co. v. United States, 345 U.S. 594 (focus on the market directly affected by the restraint)
- Topco Associates, Inc. v. United States, 405 U.S. 596 (horizontal agreement per se rule context)
- Brown Shoe Co. v. United States, 370 U.S. 294 (market definition must reflect commercial realities)
- Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (rule-of-reason competitive-effect inquiry)