July 14th, 2014 by James
American Express Co (AXP.N) is set to face off against the U.S. government and 17 states in a trial over claims that it stifles competition from credit card providers that charge lower processing fees.
The trial, which is expected to last two to three months, will have American Express rules at trial that bar its millions of merchants from offering incentives for customers to use less-expensive credit cards or cash when making purchases. According to the government, Amex charges the highest processing fees on average of any card network. The government, in a pre-trial brief, remarked that merchants would testify that they would like to use discounts and other tools for promoting competition among the card networks that would help them negotiate lower fees.
According to the Justice Department, the evidence presented at trial will reveal that rules of Amex prevent credit card networks from competing for merchant business and deny merchants a way for reducing their costs.
The U.S. Justice Department and several states sued Amex, Visa Inc (V.N) and MasterCard Inc (MA.N) in 2010. The latter two settled the case the same day it was filed. The states include Michigan, Ohio, Texas, Missouri, Maryland, Arizona, and Iowa.
U.S. District Judge Nicholas Garaufis of Brooklyn will preside over the non-jury trial.
The case is United States of America, et al v. American Express Co, U.S. District Court for the Eastern District of New York, No. 10-04496.
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