WASHINGTON – Yesterday, the U.S. Supreme Court heard oral arguments in Ohio, et al. v. American Express, a case examining whether American Express (AmEx) rules that bar retailers from encouraging customers to use lower-fee payment methods violate antitrust law. Specifically, the case concerns so-called Non Discrimination Provisions in AmEx merchant agreements that bar merchants from directly or indirectly steering customers to cheaper payment methods by, for example, offering discounts for customers using less costly payment methods or informing customers of the relative costs of different payment methods. The case was brought by a collection of state attorneys general and the Department of Justice in 2010. Visa and MasterCard dropped similar “anti-steering” rules from their merchant agreements in 2010 after entering into settlement agreements with the Department of Justice, but AmEx refused to settle.

During oral arguments, the Justices seemed split: Justice Neil Gorsuch appeared sympathetic to American Express’s position. He told Ohio State Solicitor Eric Murphy (who argued on behalf of the petitioner state governments) that he did not see evidence that AmEx’s rules have caused net price increases for consumers, adding that “we’re not here to protect competitors . . . or necessarily even merchants. The antitrust laws are aimed at protecting consumers.” Justice Sonia Sotomayor, by contrast, said that American Express’s anti-steering rules—by prohibiting merchants from offering discounts or other incentives for cheaper payment methods—restrict price competition, which, she said, is about “my choice, not your choice about what’s more valuable to me.”

The Supreme Court agreed to hear the case after the U.S. Court of Appeals for the Second Circuit overturned a February 2015 district court decision finding that AmEx’s rules constitute an illegal restraint on trade. NACS filed an amicus curiae brief with the Court as part of a coalition of retailer associations. In that brief, NACS argued that by prohibiting merchants from giving their customers accurate information about the costs associated with different payment methods, AmEx’s Non Discrimination Provisions restrain price competition between credit card networks, which causes higher merchant fees and leads to increased prices for all consumers, regardless of the payment methods they use. NACS continues to monitor the case closely and will keep members apprised of any developments.