Antitrust Issues in Two-Sided Network Markets: Lessons from in Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation

24 Pages Posted: 26 Nov 2014

See all articles by Alan Sykes

Alan Sykes

Stanford University - Law School

Date Written: November 25, 2014

Abstract

In 2013, I served as a court-appointed expert in consolidated class and individual plaintiff antitrust litigation against Visa and Mastercard in the Eastern District of New York. The litigation involved a challenge to default interchange fees established by Visa and Mastercard, and to certain network rules imposed on affiliated merchants. My task was to assist the court in evaluating the merits of a proposed settlement. An evaluation of the reasonableness of the eventual settlement from an economic perspective entails a comparison between what the plaintiffs received in the proposed settlement and the expected returns to the plaintiffs of litigating the case to conclusion. The returns to litigation in turn depend on the prospects of establishing liability, the likely magnitude of damages and the nature of any injunctive relief conditional on liability, and of course the costs of litigation. In this commentary, I focus on the liability, damages, and injunctive relief issues because of their economic novelty and broader implications for other antitrust cases. The paper will appear in a symposium issue of Competition Policy International.

Keywords: antitrust, two-sided markets, credit card industry

JEL Classification: L12, L40, L41, L42

Suggested Citation

Sykes, Alan, Antitrust Issues in Two-Sided Network Markets: Lessons from in Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation (November 25, 2014). NYU Law and Economics Research Paper No. 14-45. Available at SSRN: https://ssrn.com/abstract=2530657 or http://dx.doi.org/10.2139/ssrn.2530657

Alan Sykes (Contact Author)

Stanford University - Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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