The Retail Litigation Center is once again calling out American Express Co. for its "anti-steering rules" and is asking the U.S. Supreme Court to overturn an appeal of a lower court decision that allows the credit card company's current practices to stay on the books.
In its July 7 amicus brief in the State of Ohio v. American Express, the retail advocacy group asked the Supreme Court to review and reinstate a New York federal district court's injunction "and the hope it offered of subjecting credit card processing fees to competition." The decision, in which the lower court found Amex's rules to be anticompetitive, was reversed by a January judgment from the U.S. Court of Appeals for the Second Circuit.
"We're asking the Supreme Court to grant certiorari ... It's always a long shot but we want to make sure the Supreme Court can be aware of all of the implications [of Amex's rules]," said Deborah White, general counsel of the Retail Industry Leaders Association and president of its legal arm, the Retail Litigation Center.
American Express has rules in place with its merchants that prevent the retailers from offering discounts for customers using certain credit cards. Visa and Mastercard previously agreed to remove a similar set of rules they have, but with Amex's practices still in effect, White said that none of the other credit card companies can stand to benefit.
"The rules here not only insulate Amex from competition, but effectively suppress competition among all credit card companies," said the brief, which was drafted by Debbie Greenberger, a litigator with Emery Celli Brinckerhoff & Abady.
There is an argument that retailers could drop Amex altogether but "that isn't realistic," White said, because Amex holds the majority of the market. According to the RLC, 90 percent of retailers currently accept Amex payments.
A spokeswoman for American Express did not respond to emails requesting comment. On its website, in response to a U.S. Department of Justice lawsuit accusing the company of violating antitrust laws, the company listed reasons why it does not.
American Express argued that "on a like-for-like basis, there is essentially no difference in price" among the major credit card companies. It also claimed that "while most American Express card members hold competing cards, the vast majority of cardholders do not carry American Express cards, so steering can only occur towards the dominant networks."
The RLC argued that until Amex changes its rules, the credit card marketplace will continue to lack competition. "In a functioning competitive market, customers steer their business to lower priced alternatives; lower prices yield higher demand," the brief read. "When McDonald's lowers its Big Mac prices, more customers buy Big Macs and fewer buy Burger King's Whoppers."