American Express (NYSE: AXP) said today that it has agreed to settle two putative antitrust class actions filed by U.S. merchants that challenged the company’s Card acceptance agreements. The settlement agreement will address certain merchant concerns, while helping to ensure that American Express Card Members are treated fairly at the point of sale. It will also limit the Company’s exposure to future legal claims.
The first lawsuit, In re American Express Anti-Steering Rules Antitrust Litigation, challenges the Non-Discrimination Provisions in the company’s merchant contracts. The lawsuit dates back to 2006 and is pending in the U.S. District Court for the Eastern District of New York. The second lawsuit, In re Marcus Corporation, challenges American Express’ Honor All Cards Provisions. This lawsuit dates back to 2004 and is pending in the U.S. District Court for the Southern District of New York.
Under the terms of the agreement:
- Merchants continue to agree that if they decide to surcharge their customers using credit or charge cards, any surcharge on American Express Card transactions would be no more than the surcharge on credit or charge card products issued on competing networks.
- Similarly, merchants agree that if they surcharge customers paying with prepaid or debit cards, they would not surcharge American Express prepaid cards more than any competing prepaid or debit cards issued on competing networks.
- Merchants would be allowed to surcharge charge and credit cards, even if they do not surcharge prepaid and debit card transactions.
- Merchants would agree not to pursue further legal challenges to American Express’ Non-Discrimination and Honor All Cards Provisions for at least 10 years after these changes are implemented.
- American Express would agree to pay reasonable attorneys fees for both cases up to a maximum total of $75 million, as approved by the Court.
- If merchants choose to pursue individual lawsuits or arbitrations for alleged damages relating to the Non-Discrimination and Honor All Cards Provisions, they would agree that any potential recovery would be limited to damages for the period prior to the implementation of the changes.
The company’s card acceptance agreements will continue to require merchants to honor all American Express cards with the exception of U.S. issued traditional debit cards, should the company or its affiliates or partners decide to issue them at a future date. The agreements will also continue to prohibit merchants from steering customers away from using American Express cards to competing products.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV