Ohio v. American Express Co.

Background

The United States and several states sued American Express, saying Amex’s merchant contracts forbid stores from steering customers away from Amex cards to avoid higher merchant fees. Merchants sometimes ask customers to use cheaper cards to lower costs; Amex says its no‑steering terms protect a rewards-focused model funded by higher merchant fees.

Reasoning

The Court considered whether those no‑steering terms illegally harmed competition. It applied the rule-of-reason balancing test and decided the credit‑card business must be seen as one two‑sided transaction market that links merchants and cardholders simultaneously. Because of that, plaintiffs had to show harm to the overall transactions market — higher transaction prices, fewer transactions, or reduced competition — not only higher merchant fees. The Court found the plaintiffs did not prove transactions were priced above a competitive level, output did not decline, and competition was not stifled, so the clauses did not violate federal antitrust law.

Real world impact

Merchants will face limits on using contractual steering bans as an antitrust remedy to lower acceptance costs. American Express’ rewards-driven model and higher merchant fees are preserved unless new evidence shows overall transactional harm. Competing card networks and merchants retain other ways to compete, and consumers continue to see broad card offerings.

Dissents or concurrances

A dissent argued the trial record showed real anticompetitive effects: merchants testified they would have steered customers and Discover’s low-fee strategy failed because the clauses, so the dissent would have found the provisions unlawful.