American Express Company filed on Monday a lawsuit against Visa, MasterCard and eight major banks that are members of the two card associations, seeking monetary damages for the business lost as a result of the illegal, anti-competitive practices of the card associations.
The lawsuit, filed in the U.S. District Court in Manhattan, follows last month’s U.S. Supreme Court decision not to hear an appeal from Visa and MasterCard. The two associations were seeking to overturn a lower court ruling that found them in violation of anti-trust laws. The suit does not specify an amount of monetary compensation, but American Express is expected to seek damages that could total in the billions of dollars.
“The Supreme Court’s decision was a victory for the U.S. Department of Justice and for American consumers,” American Express said in a press release. “It effectively ended restrictions that prevented American Express and others from competing for the card business of banks that wanted to offer their customers a broader range of products and rewards.”
Individual banks named as defendants in the lawsuit include: J.P. Morgan Chase, Bank of America, Capital One, U.S. Bancorp, Household Bank, Wells Fargo, Providian National Bank and USAA Federal Savings Bank.
“The federal courts have already found that Visa and MasterCard broke the law,” said Kenneth I. Chenault, Chairman and CEO of American Express. “The card associations functioned as a cartel. Banks who had expressed an interest in working with us were stopped before they could start.”
Chenault added: “Visa, MasterCard and their member banks restricted competition for years. They blocked the development of a new generation of products that would have provided consumers with greater value, convenience and choice.”
Because of the court rulings, U.S. banks will be able to develop and offer card products that will be processed on any of the competing merchant networks.
(via PR Newswire)
Comments on this entry are closed.