Antitrust Policy Takes Center Stage In Appeals Court Rulings

Recent rulings from the United States Court of Appeals have shined a bright spotlight on antitrust concerns.

The New York Times reported that plaintiffs are having a tough time in antitrust cases, noting two instances of judgements being unanimously reversed solely because the panel could not agree on the facts.

Antitrust issues and enforcement have sparked much debate publicly.

In the case of United States v. American Express, a federal appeals court ruled that a lower court made a mistake when deciding American Express’ contracts with merchants restrained trade and violated antitrust laws.

The appeals court said a judgment in favor of American Express should be entered in the case. The ruling is seen as a victory for American Express, which has faced criticism that it charges merchants too much money in fees.

The case resulted from a lawsuit filed by the U.S. Department of Justice against American Express, Mastercard and Visa. While Mastercard and Visa settled with the Justice Department and agreed to stop the anti-steering practices, American Express instead decided to fight.

“The court said the rules had not been shown to be harmful, because the government failed properly to define the market in which Amex competes,” Chris Sagers, a law professor at Cleveland State University, said in his NYT piece.

“The opinion is striking on many levels. The problems begin with a wholesale rejection and rewriting of the facts found at the trial concerning market definition, based on nothing more than the appeals court’s own finding of facts.”

According to Sagers, the court’s ruling in favor of Amex essentially allows the card network to overcharge merchants in order to present incentives to customers, such as cash-back rewards and airline miles. He noted that this decision exposes the court’s lack of faith in how free markets work.

“Amex controls nearly a quarter of a market with high barriers to entry in which the top three companies have about 95 percent of the business, and evidence showed that it was able to impose a series of systematic rate increases on merchants without loss of charge volume,” he added.