American Express Prevails In Supreme Court Anti-Steering Suit

Munger, Tolles & Olson prevailed in a 5-4 decision at the U.S. Supreme Court in favor of American Express (Amex) in a lawsuit alleging the credit card company’s merchant contracts violated federal antitrust laws.

The lawsuit, originally brought by the U.S. Department of Justice and seventeen States, claimed the Section 1 of the Sherman Antitrust Act outlawed provisions of Amex’s contracts with merchants that accept its cards, under which merchants agreed not to steer customers to competing card networks. The U.S. District Court for the Eastern District of New York found in favor of the government after a lengthy trial. Munger, Tolles & Olson joined Amex’s team on appeal.

Amex appealed, and the U.S. Court of Appeals for the Second Circuit held in Amex’s favor. The court found that the district court’s decision focused too narrowly on the merchant’s side of the market for Amex’s service and did not adequately address the effect of Amex’s rules on cardholders.

Recognizing that Amex is a “two-sided platform” that delivers its service simultaneously to both a merchant and a cardholder, on June 25, 2018, the U.S. Supreme Court affirmed Amex’s win on appeal, holding that “Amex’s anti-steering provisions do not unreasonably restrain trade.”

The team representing Amex included Benjamin J. Horwich and Justin P. Raphael.