While the Supreme Court’s decision in Ohio v. Amex has been and will continue to be debated as it is applied in lower courts, it did provide some guidance on how the antitrust laws apply to two-sided platform products, such as the two-sided credit card market that brings together merchants and customers. At issue in Amex were American Express’s “anti-steering” provisions which prevented merchants from directing customers to use a credit card that charged a lower processing fee than American Express. In evaluating whether these provisions violated the Sherman Act, the Court determined that the credit card market should be viewed as a single market where transactions are jointly consummated by merchants and cardholder customers. Because evidence of anticompetitive effects was only presented on the merchant side of the market and not on the cardholder side of the market, the Court concluded that the plaintiffs had not met the burden of showing anticompetitive effects. As such, platforms with “indirect network effects” — where the value of the platform for one group depends on how many members of a different group participate — may be considered one platform market as opposed to two distinct markets for purposes of antitrust analysis.
The consequence of Amex is a broader than just credit cards. It may have an effect on other two-sided markets that could be considered a single market, which may make it more difficult for plaintiffs to demonstrate anticompetitive effects. Dissenting, the minority opinion argued that it was not even necessary to define the market at the first stage of the rule of reason analysis because the district court had found direct evidence of competitive effects. This has furthered the debate about the role of market definition in antitrust cases but it is not clear in what direction this will ultimately land.
Whether and how the Court’s decision will apply only to the credit card industry or broader multisided platforms like Facebook Inc., Google Inc. and Amazon Inc. remains to be seen, but Amex has potentially given these platforms more latitude under the antitrust laws. Goodwin will continue to monitor these developments especially on behalf of clients who are part of these affected ecosystems.