The Role of Market Definition in Assessing Anti-Competitive Harm in Ohio v. American Express

21 Pages Posted: 18 Jun 2019

See all articles by David S. Evans

David S. Evans

Global Economics Group; University College London

Richard Schmalensee

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: June 8, 2019

Abstract

This article shows that the Supreme Court reached the right outcome in Ohio et al. v. American Express. The District Court had found that American Express was a two-sided transaction platform that provided joint services simultaneously to cardholders and merchants. But it then chose, by adopting a single-sided merchant services market, to analyze the effect of the anti-steering provisions at issue solely on one side of these simultaneous transactions. That decision appears to have prevented the lower court from seeing that the plaintiffs’ evidence of anticompetitive harm to merchants was weak. The District Court also decided that case law prevented it from considering the effect of the conduct on the other half of the transactions even at the second-stage of the rule of reason. The Supreme Court did not discuss the limitations of the plaintiffs’ theory and evidence at length but simply and properly found that the plaintiffs had failed to prove antitrust injury to platform competition for transactions. This article also shows that criticisms of the Supreme Court decision seem to be based on the rejection or misunderstanding of the economics literature on multi-sided platforms on which the District Court, the Appeals Court, and the Supreme Court all relied.

Keywords: two-sided markets, multisided platforms, American Express decision, market definition for two-sided markets, antitrust and network effects, antitrust of two-sided platforms, Supreme Court decision in American Express, rule of reason, rule of reason for platform businesses

JEL Classification: K21, K23, K40, L41, L42, L49, L12, L13, L22, G21, G23, G38, D23

Suggested Citation

Evans, David S. and Schmalensee, Richard, The Role of Market Definition in Assessing Anti-Competitive Harm in Ohio v. American Express (June 8, 2019). Available at SSRN: https://ssrn.com/abstract=3401325 or http://dx.doi.org/10.2139/ssrn.3401325

David S. Evans (Contact Author)

Global Economics Group ( email )

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University College London ( email )

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Richard Schmalensee

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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Cambridge, MA 02142
United States
617-253-2957 (Phone)
617-258-6617 (Fax)

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