U.S. Judge: DOJ Merchant Antitrust Case Against Amex May Proceed

This story was updated at 9:40 EDT on May 8.

A federal judge on May 7, ruled that an antitrust lawsuit brought by the Justice Department and several states challenging merchant rules imposed by American Express Co. may proceed to trial.

Filed in 2010, the lawsuit alleges Amex’s rules prevent merchants from offering consumers discounts and incentives to use less-expensive forms of payment. The Justice Department also had sued Visa and MasterCard, and both quickly settled.

In a statement, Amex noted that the court ruled that it would have to hear all the evidence at trial before making a decision in this case.  “American Express continues to believe that it has strong defenses to the DOJ lawsuit and will defend the case vigorously,” the company said.

Amex traditionally has said merchants may pay more to accept its cards, but they also benefit from the card brands’ relatively wealthy cardholders, who generally spend more and buy more often than other cardholders.

And while Amex also contends it lacks market power to influence merchants, U.S. District Judge Nicholas Garaufis of Brooklyn said the government wasn’t required to prove market power to make a successful antitrust claim.

In separate cases against Amex, the U.S. Supreme Court last June blocked a merchant class-action suit that alleged Amex used its dominant position to “compel” merchants to accept its payment cards. The court, in a 5-3 decision, ruled that merchants who brought that suit must arbitrate their claims.

Amex in December also agreed to settle two outstanding merchant class-action claims challenging the company’s card-acceptance agreements.

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