## Facts

- State attorneys general, led by Ohio, sued American Express and a subsidiary under § 1 of the Sherman Act on behalf of merchants.
- American Express operates a credit-card network that connects merchants and cardholders and earns substantial revenue from merchant discount fees.
- American Express merchant contracts included “anti-steering” (non-discrimination) provisions barring merchants who accept Amex from steering customers to other cards at the point of sale (e.g., via discounts, signage, or prompts favoring cheaper cards).
- The states alleged the anti-steering provisions insulated Amex from price competition, enabling higher merchant fees.
- After a bench trial, the district court found the provisions unreasonable restraints of trade and enjoined their enforcement.
- The Second Circuit reversed, reasoning that because credit-card networks are two-sided, plaintiffs had to show net anticompetitive effects in the combined market, not harms to merchants alone.
- The Supreme Court granted certiorari.

## Issues

1. How should the relevant market be defined and analyzed under the rule of reason for a two-sided transaction platform such as a credit-card network?
2. Whether Amex’s anti-steering provisions unreasonably restrained trade in violation of § 1 when plaintiffs primarily proved higher merchant fees without demonstrating net harm across both sides of the platform.

## Decision

- The Supreme Court affirmed the Second Circuit in a 5–4 decision (Justice Thomas).
- The Court treated the credit-card network as a two-sided transaction platform in which a single transaction simultaneously involves merchants and cardholders.
- The relevant market was the two-sided market for credit-card network services, requiring consideration of effects on both merchants and cardholders.
- Plaintiffs failed to carry their initial rule-of-reason burden because they did not show net anticompetitive effects in the two-sided market (e.g., reduced overall output, reduced quality, or higher net price for the combined service).
- Because plaintiffs failed at step one, the restraints were not proven unlawful under § 1 on the record presented.

## Legal Principles

- Under the rule of reason, plaintiffs must first prove substantial anticompetitive effects in the properly defined relevant market; only then does the burden shift to procompetitive justifications and less restrictive alternatives.
- For two-sided transaction platforms, market definition and competitive-effects analysis must account for interdependence between both sides and evaluate net effects across the platform.
- Evidence of price increases or harm on only one side of a two-sided transaction platform (e.g., higher merchant fees) does not, by itself, establish anticompetitive effects absent proof of net harm to the overall two-sided market (including output and the combined price/quality of the transaction service).
- Restraints that limit one side’s conduct may be consistent with competition if they support the platform’s ability to attract participation on both sides and maintain the transaction system’s output and quality.

## Conclusion

The Court held that credit-card networks are two-sided transaction platforms for which § 1 analysis must consider both merchant and cardholder effects; because the states did not prove net anticompetitive effects across the combined market, Amex’s anti-steering provisions were not shown unlawful under the rule of reason.


Ohio v. Am. Express Co., 138 S. Ct. 2274 (2018)