In this action, the United States and several states sued Amex over its “anti-steering” policy which forbids merchants from suggesting to customers, at the point of sale, that they use a non-Amex credit card that charges lower merchant fees.  The anti-steering policy is a vertical restraint to be analyzed under the rule of reason under Sherman Act sec. 1.  Under the rule of reason, the plaintiff bears the initial burden of showing that the anti-steering policy has a substantial anticompetitive effect that harms consumers in the relevant market.  Here, the relevant market is the two-sided market of consumer credit card users and merchant credit card acceptors.  Neither side can be considered alone because demand for the service on one side is determined by the number of users or acceptors on the other.  Plaintiffs failed to show that the anti-steering policy adversely affects competition in this two-sided market.  Amex charges merchants higher fees, but those fees offset higher benefits Amex pays its consumer users.  Though Amex increased its merchant fees, there was no evidence that the anti-steering policy allowed it to charge anticompetitive prices because production rose, rather than fell as the merchant fees increased.  Amex experienced stiff price competition from Mastercard and Visa, and its anti-steering policy was not inherently anti-competitive, but instead stemmed negative externalities, promoting inter-brand competition.

United States Supreme Court (Thomas, J.; Breyer, Ginsburg, Sotomayor, & Kagan, JJ., dissenting); June 25, 2018; 2018 U.S. LEXIS 3845