AMERICAN EXPRESS WINS. “The Supreme Court’s decision is a major victory for consumers and for American Express. By Todd Horwitz, Bubba Trading

 

Supreme Court Rules for AmEx

The Supreme Court backed American Express Co.’s policy of preventing retailers from offering customers incentives to pay with cheaper cards, a major victory for the company that puts its business model on solid legal ground.

The court’s 5-4 decision Monday, which split the court along ideological lines, handed a loss to a group of more than a dozen states and the Justice Department, which brought an antitrust challenge against an AmEx policy that prohibited retailers and other businesses from offering consumers discounts or incentives to pay with cheaper cards.

The court’s conservative majority, in an opinion by Justice Clarence Thomas, said government enforcers focused too narrowly on the swipe-fees that merchants must pay to AmEx when customers pay with a card. The company historically has charged higher fees than its competitors, which it has justified to merchants on the grounds that its customers spend more.

In a statement, an Amex spokesman said, “The Supreme Court’s decision is a major victory for consumers and for American Express. It will help to promote competition and innovation in the payments industry.”

The Retail Litigation Center, a group representing retailers, said in their own statement that the decision was a loss for American consumers. “Competition in the credit card space is sorely lacking. The Court’s decision to uphold the Second Circuit’s misguided approach will allow AmEx to continue to stifle competition and prevent consumers from understanding the cost of rising credit card fees.

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Observers saw it as a win for other companies like Amazon, Google and Uber that have similar models charging entities fees to access the consumers using their sites.

Keep those stops tight
Todd “Bubba” Horwitz

Todd Daily commentary and analysis can be found here.

 

Financial Markets & Political Commentary

 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.