WASHINGTON–The Supreme Court has ruled in favor of an American Express policy that prevents retailers from offering customers incentives to pay with less-expensive cards.
The ruling was immediately blasted by retailers.
The court’s decision is a loss for group of a dozen-plus states led by Ohio and the Justice Department, which had brought the challenge to American Express’ policy prohibiting retailers and other businesses from offering consumers discounts or incentives for using a card from a different issuer.
In the 5-4 opinion written by Justice Clarence Thomas, the court ruled that government antitrust enforcers were unable to meet their burden of proving that the AmEx anti-steering rules harmed consumers.
The decision split the court along ideological lines with conservative justices in the majority.
“Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit-card transactions,” Justice Thomas wrote for the majority.
For retailers, the decision means merchants that accept AmEx cards won’t be able to ask customers to use other cards for purchases.
‘A Blow to Competition’
Following the ruling, the National Retail Federation said the decision “will perpetuate a system that costs merchants and consumers billions of dollars a year.”
“Today’s ruling is a blow to competition and transparency in the credit card market,” NRF Senior Vice President and General Counsel Stephanie Martz said. “The American Express rules in question have amounted to a gag order on retailers’ ability to educate their customers on how high swipe fees drive up the price of merchandise.”
“By denying merchants the right to simply ask for another card or offer an incentive for using a preferred card, the Supreme Court has undermined the principle of free markets where one company should not be allowed to dictate the practices of an entire industry in order to protect its business model,” Martz added. “This misguided decision represents a missed opportunity to take a stand in favor of free markets and bring soaring credit card fees under control.”
The NRF had earlier argued in court that the Amex rules have helped the card company avoid pressure to reduce the fees it charges merchants and, in turn, has reduced incentives for Visa, Mastercard or Discover to do the same.