Ohio v. American Express Co.

Summarized by:

  • Court: U.S. Supreme Court Certiorari Granted
  • Area(s) of Law: Consumer Credit
  • Date Filed: October 16, 2017
  • Case #: 16-1454
  • Judge(s)/Court Below: 838 F.3d 179 (2d Cir. 2016)

Whether a narrow definition of the relevant market may permit a finding of anti-competitive effects under the Sherman Act rule of reason analysis, thereby requiring the defendant to demonstrate the restraint on trade had pro-competition benefits.

Respondent credit card company contractually prevented its merchants from steering retail customers toward alternative cards that provided the merchant with a lower credit card transaction rate. Respondent titled this contractual obligation as the non-discrimination provisions (NDPs). Based on Respondent's NPDs, the government alleged Respondent violated §1 of the Sherman Act, which prohibits unreasonable restraints on trade. The federal district court agreed and granted a permanent injunction restraining the NDPs. The district court held that Respondent violated §1 of the Sherman Act by using NDPs to prevent merchants from (1) offering incentives to retail customers who used lower transaction rate cards, (2) stating preferred cards, or (3) telling retail customers the transaction rates charged to merchants. Respondent appealed to the Second Circuit arguing that the district court erred by only considering the harm to the merchant and not accounting for the impact to the retail customer. The Second Circuit reversed and remanded, concluding that the district court incorrectly applied the rule of reason standard when it focused only on the interest of the merchants when defining the relevant market. The Second Circuit determined the error in defining the relevant market left the district court with an erroneous analysis of market power and anti-competitive effects under the rule of reason. On appeal to the U.S. Supreme Court, the government argues that §1 of the Sherman Act and applicable case law does not require the court to consider the credit card company’s cardholder customers in the relevant market assessment. The government further asserts that this case gives the court an opportunity to clarify the procedure to define the relevant market.

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