Ohio v. American Express Co.
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| Ohio v. American Express Co. | |
|---|---|
| Case name | Ohio v. American Express Co. |
| Court | Supreme Court of the United States |
| Citation | 588 U.S. ___ (2018) |
| Argued | March 26, 2018 |
| Decided | June 25, 2018 |
| Majority | Thomas |
| Joining | Roberts, Kennedy, Breyer, Alito, Sotomayor, Kagan, Gorsuch (all but one) |
| Dissent | Kagan (in part) |
| Keywords | antitrust, Sherman Act, two-sided markets, payment networks |
Ohio v. American Express Co. was a 2018 Supreme Court case addressing whether certain contractual provisions of American Express Company violated federal antitrust law under the Sherman Antitrust Act. The decision focused on the competitive analysis applicable to two-sided platforms and the appropriate market definition in disputes between merchants and payment networks. The ruling affirmed the judgment for American Express and reshaped antitrust scrutiny for multi-sided businesses such as Visa Inc. and Mastercard Incorporated.
Background
The dispute arose from practices by American Express involving "anti-steering" provisions in merchant contracts that prohibited merchants from encouraging cardholders to use competing credit card networks such as Visa or Mastercard. Plaintiffs included the State of Ohio, a coalition of state attorneys general, and private merchants and consumers who alleged that American Express's rules and merchant discount fees harmed competition and raised prices. Underlying transactions often involved card issuers like Bank of America, JPMorgan Chase, and Citigroup and intermediaries including payment processors and acquirers such as Fiserv and First Data Corporation. The case implicated legal debates involving precedents like United States v. American Express Co. (prior litigation), doctrinal developments stemming from Federal Trade Commission v. Actavis, Inc. and economic theories advanced by scholars affiliated with Chicago school and Post-Chicago school antitrust thought.
Legal issues
The Court considered whether plaintiffs had sufficiently defined a relevant market under the Sherman Act and whether the challenged provisions constituted an unreasonable restraint of trade. Central legal issues included the definition of a two-sided market, the proper analytical framework for platforms active on two sides—cardholders and merchants—and which side's competitive effects must be evaluated under precedents such as United States v. Topco Associates, Inc. and Broadway Music Corp. v. Columbia Broadcasting System, Inc.. The case questioned whether price effects on one side of a platform could be offset by benefits on the other side, invoking economic models from Jean Tirole and David S. Evans, and doctrines shaped in decisions like Ohio v. American Express Co.'s contemporaries involving vertical restraints and monopsony analysis.
District and Second Circuit proceedings
At trial in the United States District Court for the Eastern District of New York, plaintiffs presented expert testimony from economists aligned with Harvard University and New York University and introduced merchant witnesses from retail chains such as Wal-Mart Stores, Inc. and Macy's, Inc.. The district court applied a single-sided market definition focusing on merchants and found that anti-steering provisions were anticompetitive, entering judgment against American Express. On appeal, the United States Court of Appeals for the Second Circuit affirmed, with extended reliance on cases like Illinois Brick Co. v. Illinois and analytical tools used in Sherman Act litigation involving price-fixing and vertical restraints; amici briefs were filed by entities including American Bankers Association, Chamber of Commerce of the United States, and Public Citizen.
Supreme Court decision
The Supreme Court granted certiorari, with arguments addressing theories from economists at Massachusetts Institute of Technology and University of Chicago. In a majority opinion by Justice Clarence Thomas, the Court reversed, holding that plaintiffs failed to define a proper market because they excluded the cardholder side of American Express's two-sided network. The opinion emphasized the significance of indirect network effects, citing analyses associated with Jean Tirole and W. Brian Arthur, and concluded that a plaintiff must show anticompetitive effects on the platform as a whole. The Court remanded, directing courts to consider evidence of how price and quality on each side of the market interact, referencing prior antitrust rulings such as Leegin Creative Leather Products, Inc. v. PSKS, Inc. for restraints analysis. A partial concurrence and a partial dissent addressed nuances about market definition and standards of proof, with references to Federal Trade Commission enforcement practices and state antitrust statutes like the Ohio Antitrust Act.
Impact and subsequent developments
The decision significantly influenced enforcement by the Department of Justice Antitrust Division and the Federal Trade Commission, prompting revised investigative approaches to platforms including Google LLC, Facebook, Inc., Amazon.com, Inc., and Apple Inc.. State attorneys general across jurisdictions such as New York, California, and Texas adjusted litigation strategies in merchant and consumer suits. The ruling affected contracts in payments ecosystems involving Square, Inc., Stripe, Inc., and PayPal Holdings, Inc., and informed merger reviews involving Visa/MoneyGram-type transactions scrutinized by the European Commission and regulators in the United Kingdom Competition and Markets Authority. Scholarly commentary appeared in outlets such as the Columbia Law Review and the Yale Law Journal.
Analysis and criticism
Antitrust scholars debated whether the Court's two-sided market framework overly favored dominant platforms by requiring plaintiffs to demonstrate net anticompetitive harm across both sides, drawing critique from academics at Columbia University, Stanford University, and New York University School of Law. Critics argued the decision raised barriers for plaintiffs in merchant-facing suits and may have reduced deterrence against exclusionary practices by firms like American Express. Defenders of the ruling cited methodological rigor from economists affiliated with Princeton University and University of Chicago Law School, arguing that the judgment corrected single-sided analytical errors and aligned with economic realities of multisided platforms. Postdecision litigation and policy reports from organizations such as OECD and Competition and Markets Authority continue to refine how antitrust law treats networks and multisided platforms.