Visa, MasterCard Settle DOJ Antitrust Suit; American Express Soldiers On

Oct. 6, 2010

On Monday, after a lengthy investigation, the U.S. Department of Justice filed a lawsuit charging the three largest American credit card companies with anticompetitive practices and settled with two of them. U.S. Attorney General Eric Holder, along with attorneys general from seven states, said the common practice of forcing merchants who accept any of a card network’s cards to accept all of them and prohibiting them from offering discounts to consumers who use cards that carry less costly fees, is anticompetitive. “These restrictive rules prevent price competition among credit card networks, which means merchants face increased business costs and consumers pay higher prices,” said Holder. “With today’s lawsuit we are sending a clear message: we will not tolerate anticompetitive practices.” Visa and MasterCard, as expected, responded by immediately settling with the government. Under the settlement, Visa and MasterCard agreed not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card. Visa and MasterCard also must allow merchants to express preferences for the use of a low-cost card within a network or other form of payment. American Express, however, said it will fight the Justice Department suit. “American Express maintains the industry’s most restrictive merchant rules,” said Holder. “American Express also has the highest fees of any credit card company.   They refuse to give merchants the ability to offer rewards to consumers who use a less expensive card, or even to provide information to consumers about the costs of using American Express’s cards.”