Today Retail Litigation Center (RLC) President Deborah White reacted to the U.S. Supreme Court's decision to hear Ohio, et al. v. American Express, a case considering the legality of American Express rules that prevent retailers from offering consumers benefits for using credit cards with lower fees. Retailers have long said Amex's rules are an antitrust violation that deny consumers truthful information about their credit cards and prevent customers from taking advantage of benefits that retailers might offer in the absence of those rules.
"The growing chorus of skepticism from the high court is an important signal that the lower courts should exercise vigilant oversight of the practices that credit card companies adopted to increase their profits at the expense of healthy competition," said RLC President Deborah White.
The fact that the U.S. Supreme Court is willing to consider the merits of this case – even in the absence of traditional indicia of cert-worthiness – is a strong signal of concern and in keeping with the Court's recent decisions related to anti-competitive activity by the credit cards. Notably, the Court denied certiorari last term when Visa, MasterCard and others asked the Court to reconsider a different Second Circuit decision that struck down the faulty $6 billion settlement of a long-standing suit challenging the cards' anticompetitive behavior in MDL-1720.
In a related vein, the Supreme Court recognized in Expressions Hair Design v. Schneiderman that a state law that prevented merchants from surcharging credit card transactions regulated merchants' ability to communicate truthful pricing information to their consumers. As a result, Chief Justice Roberts, writing for the Court, noted that First Amendment scrutiny was required.
"While intense competition is a hallmark of the retail industry, it is largely absent from the credit card market where fees continue to skyrocket. These fees—largely hidden from the consumer—are among the highest costs of doing business for America's retailers.
"Retailers should have the right to educate consumers about credit card fees and their impact on prices and other benefits. Transparency will empower consumers to make choices that provide them with the greatest value when using a credit card.
"The RLC looks forward to providing the Supreme Court with the retail industry's perspective again on this issue when the Court considers the merits of this case later in the Term," said White.
Amex, Visa and MasterCard once had rules prohibiting merchants from encouraging customers to use lower-fee credit cards. Visa and MasterCard dropped the restriction in a 2010 settlement with the Justice Department. Amex refused to do the same, and was sued by the Justice Department, as well as by a group of states.
A U.S. District Court judge ruled in February 2015 that the Amex rules were a violation of federal antitrust law and enjoined them, but Amex appealed and a three-judge panel of the 2nd Circuit ruled in its favor this September. The states petitioned the U.S. Supreme Court to re-consider the lower court's decision; the RLC filed an amicus brief in support of that request that details the impact that the American Express anti-steering rules have on consumers and merchants alike.
The Retail Litigation Center is a public policy organization that identifies and engages in legal proceedings that affect the retail industry. The RLC, whose members include some of the country's largest retailers, was formed to provide courts with retail industry perspectives on significant legal issues, and highlight the potential industry-wide consequences of legal principles that may be determined in pending cases.