Ohio v. American Express

* Justices
* CHIEF JUSTICE JOHN ROBERTS
* ASSOCIATE JUSTICES
* SAMUEL ALITO
* AMY CONEY BARRETT
* NEIL GORSUCH
* KETANJI BROWN JACKSON
* ELENA KAGAN
* BRETT KAVANAUGH
* SONIA SOTOMAYOR
* CLARENCE THOMAS
* CASES BY TERM
* Supreme Court cases, October term 2026-2027
* Supreme Court cases, October term 2025-2026
* Supreme Court cases, October term 2024-2025
* Supreme Court cases, October term 2023-2024
* Supreme Court cases, October term 2022-2023
* Supreme Court cases, October term 2021-2022
* Supreme Court cases, October term 2020-2021
* Supreme Court cases, October term 2019-2020
* Supreme Court cases, October term 2018-2019
* Supreme Court cases, October term 2017-2018
* Supreme Court cases, October term 2016-2017
* Supreme Court cases, October term 2015-2016
* All earlier cases
* HISTORY OF THE COURT
* Cases by chief justice
* Cases by decade
* Recent vacancies
* 2022 VACANCY AND JACKSON CONFIRMATION
* 2020 VACANCY AND BARRETT CONFIRMATION
* 2018 VACANCY AND KAVANAUGH CONFIRMATION
* 2017 VACANCY AND GORSUCH CONFIRMATION

|

Ohio v. American Express
Term: 2017
Important Dates
Argument: February 26, 2018
Decided: June 25, 2018
Outcome
Second Circuit affirmed
Vote
5 - 4
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Samuel Alito • Neil Gorsuch
Dissenting
Ruth Bader Ginsburg • Stephen Breyer • Sonia Sotomayor • Elena Kagan

## Contents

* 1 Background
* 1.1 Legal question
* 1.2 Case background
* 1.3 Panel opinion
* 2 Petitioner's challenge
* 3 Certiorari granted
* 4 Question presented
* 5 Audio
* 6 Transcript
* 7 Outcome
* 7.1 Decision
* 7.2 Majority opinion
* 7.3 Dissent by Justice Breyer
* 7.4 Text of the opinion
* 8 See also
* 9 Footnotes

Ohio v. American Express is a case argued during the October 2017 term of the U.S. Supreme Court. Argument in the case was held on February 26, 2018. The case came on a writ of certiorari to the United States Court of Appeals for the 2nd Circuit.

The issue in this case was what a plaintiff must show in order to carry its burden of proof in certain antitrust cases.

HIGHLIGHTS

* The case: The United States and several U.S. states accused American Express of violating U.S. antitrust law by prohibiting merchants who accept American Express cards from expressing a preference for other forms of payment.

* The issue: "Under the 'rule of reason,' did the Government's showing that Amex's anti-steering provisions stifled price competition on the merchant side of the credit- card platform suffice to prove anticompetitive effects and thereby shift to Amex the burden of establishing any procompetitive benefits from the provisions?"[1]

* The outcome: On a vote of 5 - 4, the Supreme Court affirmed the ruling of the Second Circuit, holding that American Express’ antisteering provisions did not violate federal antitrust law.[2]

In brief: The United States and several U.S. states alleged that American Express was in violation of § 1 of the Sherman Act. A federal district court found in the plaintiffs' favor. On appeal, the United States Court of Appeals for the 2nd Circuit reversed. It held that the plaintiffs had not met their burden under the rule of reason, the test that courts apply to determine whether a company has violated § 1 of the Sherman Act.

You can review the lower court's opinion here.[3]

## Background[edit]

### Legal question[edit]

This was a case about the standard for determining when a company is in violation of United States antitrust laws. The antitrust law at issue in this case was § 1 of the Sherman Act. In order to determine whether a defendant has violated § 1 in cases like this one, courts use a test called the rule of reason. The United States Court of Appeals for the 2nd Circuit outlined how courts apply the rule of reason:

“  | Courts apply the rule of reason using a three‐step burden‐shifting framework. First, a plaintiff bears the initial burden of demonstrating that a defendant’s challenged behavior had an actual adverse effect on competition as a whole in the relevant market...If the plaintiff cannot establish anticompetitive effects directly by showing an actual adverse effect on competition as a whole within the relevant market, he or she nevertheless may establish anticompetitive effects indirectly by showing that the defendant has sufficient market power to cause an adverse effect on competition...Once the plaintiff satisfies its initial burden to prove anticompetitive effects, the burden shifts to the defendant to offer evidence of any pro‐competitive effects of the restraint at issue... If the defendant can provide such proof, then the burden shifts back to the plaintiff to prove that any legitimate competitive benefits offered by defendant could have been achieved through less restrictive means.[3][4][5] | ”

|
|

This case was about what a plaintiff must show to meet its burden under the first step of the test.

### Case background[edit]

American Express (Amex) had historically included nondiscriminatory provisions (NDPs) in its agreements with merchants who accepted Amex from their customers. Amex's NDPs required that merchants could not state a preference to their customers for any card over an Amex card, must not try to dissuade cardholders from using Amex cards, must not criticize Amex's programs, must not try to persuade customers to use other forms of payment, and must not promote any other payment products. The United States and a number of U.S. states filed suit against Amex, Visa, and Mastercard, alleging violations of the Sherman Act. Specifically, the plaintiffs argued, "Absent the anti‐steering provisions contained in each networks’ respective merchant agreements—including Amex’s NDPs—merchants would be able to use steering at the point of sale to foster competition on price and terms among sellers of network services by encouraging customers to use less expensive or otherwise preferred cards." Visa and Mastercard entered into consent agreements that resolved the plaintiffs' claims against them. Amex proceeded to trial.[3]

The district court ruled that Amex was in violation of U.S. antitrust laws. "Applying the rule of reason, the district court held that: (1) the Government proved that Amex's anti-steering provisions were anticompetitive because they stifled competition among credit-card companies for the prices charged to merchants, and (2) Amex failed to establish any procompetitive benefits."[1]

Amex then appealed to the United States Court of Appeals for the 2nd Circuit.

### Panel opinion[edit]

The United States Court of Appeals for the 2nd Circuit reversed the district court's decision. The Second Circuit "held that, to prove that the anti-steering provisions were anticompetitive (and so to transfer the burden of establishing procompetitive benefits to Amex), the Government bore the burden to show not just that the provisions had anticompetitive pricing effects on the merchant side, but also that those anticompetitive effects outweighed any benefits on the cardholder side."[3] The court concluded, "We find that without evidence of the NDPs’ net effect on both merchants and cardholders, the District Court could not have properly concluded that the NDPs unreasonably restrain trade in violation of § 1 [of the Sherman Act]."[3]

## Petitioner's challenge[edit]

The petitioners challenged the ruling of the Second Circuit. They argued that their showing of anticompetitive effects on the merchant side was sufficient to find Amex in violation of § 1 of the Sherman Act.

## Certiorari granted[edit]

On June 2, 2017, the petitioner initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. The U.S. Supreme Court granted petitioner's request for certiorari on September 28, 2017. Argument in the case was held on February 26, 2018.[1]

## Question presented[edit]

Question presented:

"Under the 'rule of reason,' did the Government's showing that Amex's anti-steering provisions stifled price competition on the merchant side of the credit- card platform suffice to prove anticompetitive effects and thereby shift to Amex the burden of establishing any procompetitive benefits from the provisions?"[1]

## Audio[edit]

* Audio of oral argument:[6]

Your browser doesn't support the audio tag.

## Transcript[edit]

* Transcript of oral argument:[7]

## Outcome[edit]

### Decision[edit]

On a vote of 5 - 4, the Supreme Court affirmed the ruling of the Second Circuit, holding that American Express’ antisteering provisions did not violate federal antitrust law.[2]

### Majority opinion[edit]

Justice Clarence Thomas authored the opinion for the court majority, joined by Chief Justice Chief Justice John G. Roberts and Justices Anthony Kennedy, Samuel Alito, and Neil Gorsuch. Thomas wrote that in order for the court to evaluate the evidence of anticompetitive effects offered by the plaintiffs, "we must first define the relevant market. Once defined, it becomes clear that the plaintiffs’ evidence is insufficient to carry their burden."[2]

Thomas wrote that the credit card market was a two-sided market, with both merchants and credit-card holders, and that the market must be analyzed as a whole. Examining the whole market, he concluded, "the plaintiffs’ argument about merchant fees wrongly focuses on only one side of the two-sided credit-card market."[2]

“  | Focusing on merchant fees alone misses the mark because the product that credit-card companies sell is transactions, not services to merchants, and the competitive effects of a restraint on transactions cannot be judged by looking at merchants alone. Evidence of a price increase on one side of a two-sided transaction platform cannot by itself demonstrate an anticompetitive exercise of market power. To demonstrate anticompetitive effects on the two -sided credit-card market as a whole, the plaintiffs must prove that Amex’s antisteering provisions increased the cost of credit-card transactions above a competitive level, reduced the number of credit-card transactions, or otherwise stifled competition in the credit-card market . . . In sum, the plaintiffs have not satisfied the first step of the rule of reason. They have not carried their burden of proving that Amex’s antisteering provisions have anticompetitive effects.[2][5] | ”

|
|

Thomas concluded, "Because Amex’s antisteering provisions do not unreasonably restrain trade, we affirm the judgment of the Court of Appeals."[2]

### Dissent by Justice Breyer[edit]

Justice Stephen Breyer dissented from the court's judgment, joined by Justices Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan. Breyer believed that the anti-steering provisions "clearly ha[d] serious anticompetitive effects."[2]

“  | American Express has disrupt[ed] the normal price-setting mechanism in the market. As a result of the provisions, the District Court found, American Express was able to raise merchant prices repeatedly without any significant loss of business, because merchants were unable to respond to such price increases by encouraging shoppers to pay with other cards. The provisions also meant that competitors like Discover had little incentive to lower their merchant prices, because doing so did not lead to any additional market share. The provisions thereby 'suppress[ed] [American Express’] . . . competitors’ incentives to offer lower prices . . . resulting in higher profit-maximizing prices across the network services market.' . . . I should think that . . . there is little more that need be said.[2][5] | ”

|
|

Breyer rejected the majority's conclusion that the market at issue should include both the market for merchants and the market for credit-card holders. Breyer argued that anticompetitive effects alleged in the case "appear only in American Express’ contracts with merchants" and the court's analysis should have focused on those contracts instead of the two-sided market the majority identified. He concluded, "unless there is something unusual about this case . . . there is no justification for treating shopper-related services and merchant-related services as if they were part of a single market."[2]

### Text of the opinion[edit]

## See also[edit]

* Supreme Court cases, October term 2017-2018

* Supreme Court of the United States

* History of the Supreme Court

## Footnotes[edit]

1. ↑ 1.0 1.1 1.2 1.3 Supreme Court of the United States, "Ohio v. American Express" Question Presented, October 16, 2017
2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 United States Supreme Court, "Ohio v. American Express Opinion," June 27, 2018
3. ↑ 3.0 3.1 3.2 3.3 3.4 United States Court of Appeals for the 2nd Circuit, "Ohio v. American Express" Opinion, September 26, 2016
4. ↑ Internal quotations omitted.
5. ↑ 5.0 5.1 5.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
6. ↑ Supreme Court of the United States, Ohio v. American Express, argued February 26, 2018
7. ↑ Supreme Court of the United States, Ohio v. American Express, argued June 2

v • e

Justices of the Supreme Court of the United States

|

Active justices|

Chief justice: Roberts
Associate justices: Alito • Barrett • Gorsuch • Jackson • Kagan • Kavanaugh • Sotomayor • Thomas

Senior justices|

Breyer • Kennedy • Souter

Former chief justices|

Burger • Chase • Ellsworth • Fuller • Hughes • Jay • Marshall • Rehnquist • Rutledge • Stone • Taft • Taney • Vinson • Waite • Warren •

White
Former associate justices|

O'Connor • Baldwin • Barbour • Black • Blackmun • Blair • Blatchford • Bradley • Brandeis • Brennan • Brewer • Brown • Burton • Butler • Byrnes • Campbell • Cardozo • Catron • Chase • Clark • Clarke • Clifford • Curtis • Cushing • Daniel • Davis • Day • Douglas • Duvall • Field • Fortas • Frankfurter • Ginsburg • Goldberg • Gray • Grier • Harlan I • Harlan II • Holmes • Hunt • Iredell • H. Jackson • R. Jackson • T. Johnson • W. Johnson, Jr. • J. Lamar • L. Lamar • Livingston • Lurton • Marshall • Matthews • McKenna • McKinley • McLean • McReynolds • Miller • Minton • Moody • Moore • Murphy • Nelson • Paterson • Peckham • Pitney • Powell • Reed • Roberts • W. Rutledge • Sanford • Scalia • Shiras • Stevens • Stewart • Story • Strong • Sutherland • Swayne • Thompson • Todd • Trimble • Van Devanter • Washington • Wayne • B. White • Whittaker • Wilson • Woodbury • Woods

Ballotpedia

About

Overview • What people are saying • Support Ballotpedia • Contact • Contribute • Job opportunities

* * *

Executive: Leslie Graves, Founder and CEO • Gwen Beattie, Chief Operating Officer

Communications: Alison Graves, Director of Communications • Carley Allensworth • Abigail Campbell • Sarah Groat • Nathaniel Harwood • Dillon Redmond
External Relations:  Geoff Pallay, Director of External Relations • Ken Carbullido, Vice President of Election Product and Technology Strategy • Ashley Fleming • Thomas Mardik • Hannah Nelson
Operations: Meghann Olshefski, Director of Operations • Amanda Herbert • Mandy Morris • Caroline Presnell • Kelly Rindfleisch
Tech: Matt Latourelle, Director of Technology Operations • Ryan Burch • Kirsten Corrao • Beth Dellea • Travis Eden • Tate Kamish • Margaret Kearney • Eric Lotto • Joseph Sanchez • Mary Susmitha

Contributors: Scott Rasmussen

* * *

Editorial Content

Josh Altic, Director of Content • Daniel Anderson, Associate Director of Elections & Data • Cory Eucalitto, Associate Director of Features • Ryan Byrne, Managing Editor of Ballot Measures • Mandy McConnell, Managing Editor of News • Doug Kronaizl, Managing Editor of Local Expansion • Abbey Smith, Managing Editor of Elections • Janie Valentine, Managing Editor of Law • Joel Williams, Managing Editor of Events • Joseph Greaney, Managing Editor of Policy • Andrew Bahl • Jaclyn Beran • Marielle Bricker • Joseph Brusgard • Emma Burlingame • Kelly Coyle • Jon Dunn • Victoria Edwards • Thomas Ellis • Nicole Fisher • Thomas Grobben • Brianna Hosea • Molly Kehoe • Tyler King • Glorie Martinez • Norm Leahy, Senior Editor • Nathan Maxwell • Brandon McCauley • Andrew McNair • Ellie Mikus • Mackenzie Murphy • Kaley Platek • Samantha Post • Adam Powell • Annelise Reinwald • Spencer Richardson • Victoria Rose • Briana Ryan • Myj Saintyl • Maddy Salucka • Emma Soukup • Alexis Thacker • Mina Vogel • Samuel Wonacott • Trenton Woodcox • Heather Yates