Authors libby rittenberg 841

Chapter 16 Antitrust Policy and Business Regulation Start Up: The Plastic War The $2.5 trillion market for credit and debit cards received a major jolt in 2004 when the U.S Supreme Court let stand a lower court ruling that Visa and MasterCard had violated the nation’s antitrust laws by prohibiting banks who issued Visa and/or MasterCard from issuing Discover or American Express cards The court found that, rather than competing with each other, Visa and MasterCard had cooperated with each other by increasing their “intercharge fees,” the fees credit card companies charge to merchants who accept credit cards for payment, in lock-step And, by locking Discover and American Express out of many markets, Visa and MasterCard were guilty of anti-competitive behavior The court’s ruling spelled major trouble for Visa and MasterCard Under U.S law, a competitor that has been damaged by the anticompetitive practices of dominant firms can recover triple the damages that actually occurred Rivals Discover and American Express filed suits against Visa and MasterCard In 2008, American Express reached an agreement with MasterCard for a settlement of $1.8 billion That followed a 2007 settlement with Visa for $2.1 billion Together, the two agreements represented the largest judgments in America’s antitrust history Discover’s $6 billion suit was still pending in mid-2008 [1] The Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 841