The U.S. Justice Department sued American Express Co. on Monday for allegedly violating antitrust law over credit card acceptance rules, and settled with Visa and MasterCard on the same issue.
The Justice Department, in a filing with the U.S. District Court for the Eastern District of New York, said the case was focused on credit card companies' efforts to stop merchants from steering customers to credit cards with lower fees imposed on the merchant.
In a proposed final judgment, Visa Inc and MasterCard Inc must allow merchants to offer discounts to customers who use cards that charge the stores less.
But American Express said the Justice Department action would hurt consumers by damaging their ability to use their preferred credit card.
"We have no intention of settling the case," Kenneth Chenault, chairman and chief executive officer of American Express, said in a statement.
"We will defend the rights of our card members at the point of sale and our own ability to negotiate freely with merchants," said Chenault. "We are confident that the courts will recognize the perverse anti-competitive nature of the government's case."
MasterCard acknowledged the settlement, which had been reported earlier by the Wall Street Journal. "The terms of the settlement will be announced later today," said Jim Issokson of MasterCard.
Visa had no immediate comment.
"Credit cards cost phenomenally more in the U.S. than abroad and the DOJ action will help open the market," said David Balto, a former policy director at the Federal Trade Commission's competition office.
Connecticut, Iowa, Maryland, Michigan, Missouri, Ohio and Texas joined the Justice Department in the lawsuit.
© 2024 Thomson/Reuters. All rights reserved.