NEW YORK – A U.S. judge ruled on Thursday that the merchant rules set by American Express violate antitrust law.

The case stems from a 2010 lawsuit in which the Justice Department said that the rules AmEx sets for merchants hurt competition and drive fees higher for consumers. The Wall Street Journal reports that the government wasn’t seeking monetary damages in the case, but instead was trying to force AmEx to drop its restrictions.

At issue is a rule that prevents merchants who accept AmEx cards from encouraging customers to use another card other than AmEx. The card company has previously said that losing this case would have “a material adverse effect” its business because AmEx uses the fees it charges to merchants to fund rewards programs and other cardholder perks.

Thursday’s ruling does not mean that AmEx must immediately drop its rules. The Wall Street Journal writes that Judge Nicholas Garaufis asked both AmEx and the DOJ to submit a proposed remedy to the situation because “the parties themselves are likely best equipped to determine how American Express’ merchant regulations might be rewritten so as to satisfy American Express’ interests” and comply with antitrust rules. AmEx said in a statement that it will appeal the ruling.

Meanwhile, the Merchants Payments Coalition, of which NACS is a founding member, issued a statement that the ruling “is one step forward to bringing badly needed competition and transparency to the entire credit card industry.”

The MPC continues: “Allowing retailers to ask consumers to use a less expensive card will result in lower prices for consumers and a fairer market for the fees merchants currently pay to accept credit and debit cards. Judge Garaufis got it exactly right that card networks charge merchants inflated prices that result in higher costs for consumers.

"Merchants across the country are thankful to the U.S. Department of Justice and to the judiciary for recognizing the anti-competitive nature of American Express’s rules and are hopeful other steps will be taken to stop similar unfair practices of the other card companies that set outrageous fees behind closed doors for their real customers, the banks issuing the cards.”