A trove of retailers and public interest groups Thursday urged the U.S. Supreme Court to reverse a ruling that upheld the legality of American Express' anti-steering provisions, which they said spells disaster for consumers and competition law alike.
Eight separate briefs were filed by groups including the American Antitrust Institute and the Open Markets Institute as well as retailers including Publix Super Markets Inc., Jack in the Box Inc. and Bally Total Fitness Corp. in support of the federal government and the 17 states that sued AmEx, Visa Inc. and MasterCard Inc. in 2010 over the anti-steering provisions they impose on merchants.
“The Second Circuit’s decision reflects a fundamentally erroneous view of the effects of AmEx’s merchant restraints,” a group of public interest organizations told the high court, adding that the ruling “could be invoked across a range of industries to shelter anti-competitive conduct from appropriate scrutiny under the antitrust laws.”
In 2015, New York’s U.S. District Judge Nicholas G. Garaufis sided with the government and the states, ruling that the anti-steering provisions, which prevent merchants from recommending different payment methods that carry lesser fees, created higher costs for consumers because nothing balanced the incentives for which AmEx and the other credit card providers purportedly had to charge merchants "inflated prices" to process transactions.
After AmEx appealed, the Second Circuit ruled in September 2016 that Judge Garaufis had improperly focused on the interests of merchants to the detriment of cardholders. The appeals court reversed the decision and remanded the case with instructions to find in favor of AmEx.
The Supreme Court took up the case in October.
The public interest groups are represented by Michael Landis of the U.S. Public Interest Research Group Education Fund Inc., Sharon K. Robertson of Cohen Milstein Sellers & Toll PLLC and George Slover of the Consumers Union.
The case is Ohio et al. v. American Express Co. et al., docket number 16-1454, before the U.S. Supreme Court.