Ohio v. American Express: Misunderstanding Two-Sided Platforms, the Charge Card 'Market,' and the Need for Procompetitive Justifications

14 Pages Posted: 22 Aug 2018 Last revised: 8 Jul 2019

See all articles by Jeffrey Lynch Harrison

Jeffrey Lynch Harrison

University of Florida Levin College of Law

Date Written: August 13, 2018

Abstract

In Ohio v. American Express Co., the United States Supreme Court had its first knowing encounter with what it incorrectly viewed as a two-sided platform in the context of American Express’ Non Disclosure Provisions (NDP). Under these provisions merchants accepting the American Express card for payment are not permitted to inform consumers that other cards charge merchants less for their use and that this could be reflected in the final price paid. The opinion includes poor reasoning, a lack of attention to precedent, and bad news for those who thought antitrust law was due for a revival. Yet, and perhaps surprisingly, the outcome may be correct. Part II of this Essay very briefly summarizes the antitrust landscape in order to provide an understanding of where the practices of America Express fit. Part III then discusses the two-sided market issue generally and how it was treated in American Express specifically. That Part includes an explanation of why what was involved in American Express was actually a one-sided market that had been segmented in the interests of price discrimination. In fact, American Express and its competitors sell a single product to one group of customers: the right to delay payment to purchasers of goods and services. Part IV also makes the point that the American Express system shares characteristics of tying, resale price maintenance, and exclusive dealing. It further claims that the NDP shares none of the qualities that make those practices frequently lawful. American Express’s activity skirts the edges of several vertical restraints and its underlying character restricted interbrand competition. Part V includes general observations about the case and suggests the outcome may be correct but that the reasoning employed to get there is troublesome in that it continues the trend to minimize the importance of antitrust law.

Keywords: Antitrust, Price Discrimination, Competition, Economics, American Express

JEL Classification: K21, L42

Suggested Citation

Harrison, Jeffrey Lynch, Ohio v. American Express: Misunderstanding Two-Sided Platforms, the Charge Card 'Market,' and the Need for Procompetitive Justifications (August 13, 2018). Available at SSRN: https://ssrn.com/abstract=3230282 or http://dx.doi.org/10.2139/ssrn.3230282

Jeffrey Lynch Harrison (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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