Randy Picker on the Future of Antitrust Enforcement After State of Ohio v. American Express
Antitrust Enforcement Of Dominant Tech Platforms In The Post-American Express World
In February 2015, the District Court of the Eastern District of New York in State of Ohio v. American Express found that American Express’s anti-steering restrictions on merchants—which, as the name suggests, restricts merchants from steering their customers to lower-priced (i.e., lower-merchant-fee) credit cards by offering consumers a portion of the savings—were anticompetitive and thus an illegal restraint on trade. The district court found that the additional fees American Express (“Amex”) charged merchants were not all passed through to cardholders in the form of additional benefits. In September 2016, the Second Circuit Court of Appeals reversed the district court’s decision, asserting that plaintiffs failed to examine the benefits of the anti-steering restraints to Amex’s cardholders on the other side of the “two-sided” platform. On June 25, 2018, the the Supreme Court sustained the Second Circuit’s decision, delivering a victory for American Express and potentially altering the playing field for a large swath of future single-firm monopolization cases involving vertical restraints.
In a New York Times op-ed titled “The Supreme Court Devastates Antitrust Law,” Columbia law professor Tim Wu wrote that the Court “is rejecting that tradition of compromise [between pure laissez-faire capitalism and state control of the economy] and taking us down a path that leads in dangerous directions.” Michael Kades of the Washington Center for Equitable Growth wrote that the decision perversely “celebrates price increases and will contribute to economic inequality.” Chris Sagers of Cleveland-Marshall College of Law writes that, in light of the special treatment afforded two-sided platforms by the Court, “we can expect every antitrust defendant and their sister to start claiming that their business is two-sided, and lower courts will find reason within the theory to give their claims the time of day.” Randy Picker of the University of Chicago Law School writes that “the majority opinion does reorganize how the government and private parties will bring antitrust cases in two-sided markets and there is little doubt that the change will make it harder to bring those cases.”
How much harder? To answer that question, we invited Michael Kades, Randy Picker, and Chris Sagers to discuss the implications of the decision on the future of antitrust enforcement, particularly with respect to dominant “two-sided” tech platforms. The Chat was moderated by Hal Singer, editor of Washington Bytes and Senior Fellow of the George Washington Institute of Public Policy. The transcript was edited lightly for readability.
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