NEW YORK – American Express, which is both a customer and competitor of Visa and MasterCard, on Friday filed a formal objection to the landmark antitrust settlement with the two card networks, saying if approved it could preclude AmEx from pursuing its own legal remedies against Visa and MasterCard.

AmEx, which issues its own competing credit cards, noted in documents filed with the U.S. District Court for the Eastern District of New York that it is also a participating merchant in the Visa and MasterCard networks through its travel, publishing and prepaid businesses and that approval of the proposed antitrust deal would prevent it from pursuing its own claims against the two cards competitors.

AmEx has a checkered history with Visa and MasterCard in antitrust cases. For example, AmEx was the recipient of a $4-billion payment from Visa and MasterCard to resolve an earlier antitrust case regarding the two card networks’ exclusionary clause barring Visa and MasterCard issuers from also issuing AmEx or other cards. AmEx was a codefendant with the two card networks in a suit brought last year by the U.S. Justice Department regarding anti-steering provisions enforced by Visa and MasterCard. Visa and MasterCard have agreed to settle the charges, but AmEx has refused to settle with the Justice Department.

AmEx argues it is different than the millions of other merchants covered under the proposed antitrust settlement, who would be allowed to surcharge Visa and MasterCard users as part of the deal. “Indeed, it is the policy of American Express to prevent discriminatory surcharging of consumers who wish to use the American Express card, not to encourage it,” AmEx lawyers argued in their court brief. “For this reason, even those American Express affiliates that function as ‘merchants’ are not proper class members, since their interests and practices are inextricably tied to American Express’ broader interests and policies as a payment network.”

Under the proposed deal, Visa, MasterCard and a half dozen big banks have agreed to pay $7.2 billion to more than 7 million merchants, and to amend some Visa and MasterCard rules to, among other things, allow merchants to discourage the use of Visa and MasterCard by surcharging customers for their use. The settlement would indemnify Visa and MasterCard from additional legal claims in the case.

A major flaw with the antitrust deal, according to the AmEx lawyers, is that it is universal and does not allow individual parties to opt-in to the settlement. “At a minimum, if the class definition is not revised, the Court should at least exercise its discretion to permit American Express to opt-out.”

Entities representing more than 1,200 merchants, including some of the biggest in the world, and trade associations also filed their opposition to the antitrust deal on Friday. The court has scheduled a hearing on the settlement for Friday.


Subscribe Now

Authoritative analysis and perspective for every segment of the credit union industry

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.