American Express, the Rule of Reason, and the Goals of Antitrust

40 Pages Posted: 11 Jul 2019 Last revised: 21 Aug 2019

See all articles by Harry First

Harry First

New York University School of Law

Date Written: May 21, 2019


Justice Gorsuch began the oral argument in Ohio v. American Express with pointed questions on consumer welfare, output, and deadweight loss. Justice Breyer began his dissent with a spirited defense of the “American approach” to using antitrust litigation, rather than government regulation, to restrain the power of the “great trusts.” But what did either have to do with the actual decision in the case and why did the two Justices stake out these positions so dramatically?

In this paper I explore the how the debate over goals — framed by Justices Gorsuch and Breyer — affected the application of antitrust’s rule of reason to an asserted new economic phenomenon, two-sided platforms. Although the case presented an opportunity for the Court to clarify the application of the rule of reason and to speak to the debate on goals currently roiling antitrust, the Court did a poor job on both. Instead, the Court’s opinion muddled the rule of reason analysis and confused our understanding of what “consumer welfare” means.

The paper begins with a general discussion of the debate over the consumer welfare standard. In the second part I discuss the rule of reason analysis that the Court applies in its decision; the third part examines the effect of two-sidedness on this analysis. In the fourth part I return to consumer welfare and its confusing use in American Express. My conclusion argues that the proper use of a consumer welfare standard in American Express, employed to advance economic and political values, would have emphasized that American Express caused economic harm to consumers and deprived them of their ability to make free choices in marketplace transactions.

Keywords: antitrust, rule of reason, consumer welfare, two-sided markets, consumer choice, consumer sovereignty, consumer harm, platforms

JEL Classification: K21, L40, L42

Suggested Citation

First, Harry, American Express, the Rule of Reason, and the Goals of Antitrust (May 21, 2019). Nebraska Law Review, Forthcoming; NYU School of Law, Public Law Research Paper No. 19-27. Available at SSRN:

Harry First (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6211 (Phone)
212-995-4760 (Fax)

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