The Department of Justice filed a civil antitrust suit against American Express (NYSE: AXP) saying that the credit-card company refused to sign-on to an industry-wide agreement which would allow merchants to push customers toward cheaper forms of credit and debit cards.
MasterCard and Visa both agreed to avoid a court-fight with the federal government and attorneys general of seven states by ending a number of restrictions which prevent their Merchants from offering discounts, rebates and other incentives to use credit cards with lower merchant fees, such as those that do not offer rewards programs.
American Express (NYSE: AXP)’s decision to fight the government means that most consumers won’t see any differences immediately when using their cards, since most merchants are still tied to rules which prevent them from encouraging customers to use other credit cards than those offered by American Express.
American Express said that it would fight the rules and the case saying that the government’s settlement would hinder competition. The company said that the settlement would favor Visa and MasterCard because they typically charge lower merchant fees than those by American Express.
“We are confident that the courts will recognize the perverse anticompetitive nature of the government’s case and that we will continue providing a competitive, superior service to card members and merchants,” Kenneth Chenault, American Express’s chief executive, said in a statement.
American Express Company (American Express) is a bank holding company. Its principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses. American Express has four segments: U.S. Card Services, International Card Services, Global Commercial Services (GCS), and Global Network & Merchant Services (GNMS). Its products and services include charge and credit card products, expense management products and services, consumer and business travel services, stored value products, such as Travelers Cheques and other prepaid products, network services, merchant acquisition and processing, point-of-sale, servicing and settlement and marketing and information products and services for merchants, and fee services. They are sold to diverse customer groups, including consumers, small businesses, middle-market companies, and corporations. Its subsidiary is American Express Travel Related Services Company, Inc. (TRS).
Shares of AXP traded down 6.53% during mid-day trading on Monday.
