Ohio v. American Express Co.

Background

The United States and several States sued American Express over contract clauses that bar merchants from discouraging customers from paying with Amex cards at the point of sale. Amex runs a business that serves two groups at once—cardholders and merchants—and funds rich cardholder rewards by charging merchants higher fees. Merchants sometimes try to “steer” customers to lower-fee cards to avoid those charges. The District Court treated merchants and cardholders as separate markets and found the clauses illegal; the Second Circuit reversed and the Supreme Court reviewed the case.

Reasoning

The central question was whether Amex’s antisteering clauses unlawfully harm competition. The Court applied the rule-of-reason test and explained that credit-card services form a single, two-sided transaction market because a transaction requires both a willing cardholder and merchant. The Court said evidence about merchant fees alone is not enough. Plaintiffs had to show the clauses raised the overall competitive price of credit-card transactions, cut transaction volume, or otherwise stifled competition. The Court concluded the plaintiffs failed to prove these harms: transaction output grew, fee increases reflected value and costs rather than clear market power, and competition among card networks continued.

Real world impact

As a result, Amex’s contractual limits on steering may remain in place. Merchants face narrower options to discourage Amex use at checkout. Card networks can continue business models that balance merchant fees and cardholder rewards. The decision leaves debates about fee levels and regulation to other forums.

Dissents or concurrances

Justice Breyer dissented, arguing the District Court’s factual findings showed the clauses prevented merchants from using steering to discipline fees, harmed competition, and that the majority improperly discounted that direct evidence.