American Express Accused Of Antitrust Violations

The Justice Department is suing American Express claiming the rules AmEx imposes on retailers are anti-competitive. Visa and MasterCard decided to settle the charges. American Express said it had no intention of settling because it doesn't have the ability to force merchants to accept products or pricing.

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The Justice Department has accused American Express of antitrust violations over the fees that it charges merchants. At the same time, the government settled similar charges against Visa and MasterCard.

NPR's Jim Zarroli reports.

JIM ZARROLI: When a consumer uses a credit card, the merchant has to pay a fee, and it can vary based on the kind of card being used. American Express tends to charge higher fees than its competitors, and so do cards that offer rewards, like airline miles. Merchants have long wanted to be able to steer customers to use cheaper cards, and even give them discounts if they do. But the card companies have barred them from doing so.

As part of the settlement announced yesterday, Visa and MasterCard said they would stop imposing these kinds of restrictions on merchants, but American Express refused to do so.

U.S. Attorney General Eric Holder charged that by doing so, American Express is violating antitrust law.

Attorney General ERIC HOLDER (Department of Justice): We need to ensure that every consumer has access to more choices and lower prices, and that simply will not happen unless and until American Express's restrictive rules are changed.

ZARROLI: American Express said it can't be guilty of anti-competitive behavior because it lacks the market power of Visa and MasterCard, and can't force merchants to take its cards. It said the Justice Department suit would allow merchants to pressure customers to use other cards. And it said that would be discriminatory. The Justice Department was joined in its suit by attorneys general of Texas, Connecticut, and five other states.

Jim Zarroli, NPR News, New York.

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