American Express Policies Harm Merchants and Competition, Court Rules
On Thursday, a district court ruled that American Express broke the U.S. antitrust laws by prohibiting merchants from asking their customers to use other brands of credit cards that would involve lower credit card processing fees. American express called the ruling wrong and plans to appeal.
The decision was the second major blow for AmEx this year, after the failed negotiations with Costco on renewing their 16-year exclusivity deal. Following the ruling American Express’ shares dropped $1.38 amid an early-year stock decline of 16 percent.
American Express argued that its contested policies made the company more competitive against MasterCard and Visa, while helping it maintain its third place on the largest payment networks list.
Judge Nicholas Garaufis, who ruled against AmEx Thursday, said that the company’s policies had actually harmed competition and merchants, while keeping its customers unaware of the high processing costs an AmEx credit card involves.
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