Document Type

Article

Publication Date

10-2021

Abstract

Now that the immediate fallout from Amex has cooled, this Article aims to give a first draft of its place in antitrust history and to offer a roadmap for the next stage of the evolution of platform antitrust analysis. We focus on several issues that have not been fully analyzed in the literature. First, we argue that the Court should have permitted multi-market balancing of effects across the separate markets in which the platform was active, thereby preserving the fundamental doctrine that relevant markets must be defined on the basis of demand substitution. Second, we propose standards to implement such balancing in a principled manner and explain how these standards could have been applied to the facts in Amex. Third, we highlight three significant omissions in the Court's analysis that confounded its assessment of the case and threaten to mislead future courts. In particular, we show that the Court failed to take into account that: (i) all three major card networks had parallel anti-steering rules during the period of alleged anticompetitive conduct and harm, which increased the anticompetitive harms by increasing the incentives for fee increases for each network, reducing the incentives for fee decreases by each network, and leading the Amex restraints to harm holders of other cards as well as non-cardholders; (ii) higher merchant fees caused by these parallel antisteering rules placed consumers into a prisoner’s dilemma game, which led inevitably to increased use of credit cards above the efficient, competitive level, making the volume of card transactions a poor proxy for welfare effects; and (iii) American Express’ strategy of promising merchants access to its relatively wealthy cardholders in exchange for a high access fee shared key properties of a buyer cartel, thereby suggesting that at least some of the cardholder benefits might have been characterized as cartel rents. Finally, we suggest several options for the courts and Congress to remedy the problems caused by the Court’s faulty analysis.

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