American Express sued by the US for anti-competitive merchant policies
October 5, 2010
(ChattaBox Business News) – A lawsuit was filed against American Express on Monday by the US Justice department, for having unjustified restrictions imposed on merchants using its cards, stated the credit card company.
The company is charged with trying to have merchants forbidden to use different credit cards than the ones facilitated by American Express. The finance company allegedly tried to prevent retailers from offering customers discounts for using rival credit cards with lower processing fees.
In a statement AMEX said “The government’s lawsuit claims that terms of American Express merchant contracts, which protect card members against discrimination and disruption at the point of sale, violate US antitrust laws.”
Louise Parent, Amex general counsel said, “In effect, the government is arguing that we cannot freely negotiate with our merchants about how they treat our card members at the point of sale.” Parent said the company’s contracts with retailers are “intended to shield consumers from pressure by merchants not to use the cards of their choice.” The Justice department’s lawsuit “will do nothing to enhance competition,” she added.
Attorney General Eric Holder told the media, “We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rules, we will accomplish exactly that.” Holder further added, “The companies put merchants and their customers in a no-win situation” and “consumers are being held hostage.”
Settlements regarding similar charges have been reached by the Justice Department, involving Mastercard and Visa.
Jim Issokson, spokesman of MasterCard said to AFP that “The terms of the settlement will be announced later today.”