Ohio v. American Express Co.
The Supreme Court ruled that American Express's contract rules barring merchants from steering customers toward cheaper credit cards do not violate antitrust law, because the government only measured harm to merchants and ignored the other side of the credit-card business — cardholders.
The decision means antitrust challenges to businesses that connect two different groups of customers, like credit-card networks, ride-sharing apps, or online marketplaces, must show harm across the whole platform, not just to one side, making such cases considerably harder to win.
How it got here: A federal trial court ruled for the government after a bench trial; the Second Circuit reversed; the Supreme Court agreed to review the case.
The Case in Depth
What happened
American Express charges merchants higher fees than rival card networks but funds generous cardholder rewards with that money. To keep merchants from discouraging shoppers from using Amex cards at checkout (called "steering"), Amex's contracts include antisteering provisions. The federal government and several states sued, arguing these provisions illegally raised merchant fees and harmed competition.
The question before the Court
Could the government prove that American Express's rules stopping merchants from steering customers to cheaper cards illegally hurt competition?
The Court's answer
No — the Court ruled that the government failed to prove American Express's antisteering rules illegally harmed competition. Because credit-card networks are "two-sided platforms" that sell one linked product—transactions—to both merchants and cardholders simultaneously, any antitrust challenge had to show harm to that whole market, not just higher fees paid by merchants.
The government's evidence focused solely on rising merchant fees, without showing that overall transaction prices exceeded competitive levels or that transaction volume shrank. In fact, card usage grew substantially during the relevant years. Because the antisteering provisions also served a plausible procompetitive purpose—protecting Amex's rewards-funded business model from free-riding merchants—the Court held the provisions did not violate the Sherman Act, and let the Second Circuit's ruling for Amex stand.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Merchants who accept American Express will keep paying its antisteering rules and cannot encourage customers to use cheaper cards at checkout. More broadly, companies that run two-sided platforms — payment networks, ride-share apps, online marketplaces — gained a legal shield: challengers must now prove harm to the whole platform, not just one group of users, making antitrust suits against such businesses harder to bring.
What changes now
This is a final merits decision affirming the Second Circuit, so the litigation over Amex's antisteering provisions is over and the provisions remain enforceable. The ruling will likely shape how future antitrust suits against other two-sided platforms — such as payment networks, ride-hailing apps, or online marketplaces — must be structured, requiring proof of harm across the entire platform rather than to just one group of users.
What this does not decide
The Court did not decide whether Amex's business practices are good policy or whether antisteering rules could survive challenge under a different legal theory. It also did not rule on markets where the two sides interact less directly than a simultaneous transaction, leaving open how the two-sided-platform framework applies to other industries.
Concurrences and dissents
Dissent — Justice Breyer
“But because the challenged contractual term clearly has serious anticompetitive effects, I dissent.”Breyer's opening statement of disagreement with the majority's ruling for Amex.
Justice Breyer argued the majority wrongly required proof of harm across a combined merchant-cardholder market when the challenged provisions appeared only in Amex's merchant contracts, so only merchant-side harm should matter under precedent like Times-Picayune. He contended the trial court's detailed factual findings already showed the provisions suppressed price competition among card networks, raised merchant prices repeatedly without losing business, and blocked Discover's low-fee strategy — direct evidence of anticompetitive harm that should have ended the inquiry without any need to define a combined market.
How the Court got there
The legal reasoning, step by step
- The Court applied the 'rule of reason,' the standard antitrust test asking whether a business practice actually harms competition on balance, and both sides agreed the first step required proving the antisteering rules substantially hurt competition and consumers.
- The Court treated credit-card networks as a 'two-sided platform' — a business that simultaneously sells linked services to two different groups (here, cardholders and merchants) who need each other for any transaction to happen at all.
- Because a credit-card sale cannot occur unless a cardholder and a merchant use the same network at the same moment, the Court reasoned that the relevant market for judging competitive harm had to include both merchants and cardholders together, not just merchants.
- Applying that combined market, the Court found the government's evidence — that Amex raised merchant fees — addressed only one side of the platform and said nothing about whether the total price or quantity of card transactions rose above competitive levels.
- The Court noted that transaction volume grew substantially during the years in question and the government offered no proof Amex charged more overall than a competitive market would allow, so rising merchant fees alone did not show market power was being misused.
- Because antisteering provisions also curbed a negative side effect (a merchant's steering away from Amex could hurt Amex's whole cardholder network) and did not stop rival networks from competing on their own fees, the Court concluded the government failed to prove the provisions were anticompetitive.
Doctrinal impact
Cases affected by this decision
Distinguishes FTC v. Indiana Federation of Dentists (476 U. S. 447)
The Court said this case involved competitors' agreements, unlike Amex's vertical merchant contracts, so it does not excuse defining the market here.