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Ohio v. American Express and the Balancing of Consumer Welfare Effects on Multiple Sides of a Platform

Sherman Act, § 1


 In Ohio v. American Express Co. the U.S. Supreme Court ruled that in the case of transaction platforms, a single relevant market must be defined, where both sides of the platform simultaneously consume the same good, namely, a transaction. Therefore, a plaintiff must show net overall harm to all sides of the market to satisfy its prima facie burden of proof. This case note argues that this rule is ill-suited to distinguish between procompetitive behavior and exercises of market power that can be justified with mere wealth transfers from one side of the market to the other. In line with an alternative allocation of the burden of proof proposed in the literature, this case note proposes a standard for evaluating countervailing benefits on all sides of the platform. Finally, the case note explains why the Court’s analysis of the effects of the anti-steering provisions was based on faulty economic grounds and the cherry-picking of facts on the record developed at the district court.

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  1. 1.

    138 S. Ct. 2274 (2018); see this issue of IIC at

  2. 2.

    Id., p. 2283.

  3. 3.

    Id., p. 2286.

  4. 4.


  5. 5.

    Id., p. 2287.

  6. 6.


  7. 7.

    Id., p. 2288.

  8. 8.

    Id., pp. 2288–2289.

  9. 9.

    US v. American Exp. Co., 88 F. Supp. 3d 143, 206 (E.D.N.Y. 2015).

  10. 10.

    In the case of closed-loop systems, such as American Express, the network is comprised of cardholders and merchants who accept the card, which at the same time are the two sides that the platform matches.

  11. 11.

    Rochet and Tirole (2003).

  12. 12.

    US v. American Exp. Co., 88 F. Supp. 3d 143, 206 (E.D.N.Y. 2015).

  13. 13.

    As measured by transaction volume Visa has 45% of the market while Amex and MasterCard trail behind with 26.4% and 23.3%, respectively. Discover has just 5.3% of the market. See 138 S. Ct. (2018), p. 2282.

  14. 14.

    Evans and Schmalensee (2016).

  15. 15.

    Rochet and Tirole (2003).

  16. 16.

    These benefits can be not only in the form of improved rewards programs but also other product improvements such as better fraud detection or other factors that actually make the product better beyond just a wealth transfer from merchants to cardholders.

  17. 17.

    The benefit can also just be reduced costs of the payment transaction by which the cardholder merely increases her surplus through an efficiency gain. Here, however, it is assumed that lower costs of the transaction prompt consumers to buy more.

  18. 18.

    Katz and Sallet (2018), p. 2168.

  19. 19.

    138 S. Ct. (2018), p. 2287. “Only a company that had both cardholders and merchants willing to use its network could sell transactions and compete in the credit card market.” (Emphasis added) In addition, it has been pointed out that, in some cases of business models that could be labelled as transaction platforms, competition from more traditional non-platform models could still be significant, as could be the case of ride hailing services or online hotel bookings. See Kathuria (2019) and Wu (2019), p. 126.

  20. 20.

    Kaplow (2015, p. 151); and FTC v. Indiana Federation of Dentists, 476 US 447, 460 (1986).

  21. 21.

    Gavil et al. (2008), p. 926.

  22. 22.

    138 S. Ct. (2018) (Breyer, J., dissenting), p. 2302.

  23. 23.

    Tsilikas (2018), p. 1089, on the other hand, argues that given the chilling effects that false-positives can have on market growth, antitrust authorities should restrain themselves from intervening. However, there are quantitative methodologies that are able to isolate the effect of a given conduct on price. In instances where this evidence is strong, the risk of false-positives is lower and there should not be chilling-effects problem. See McCrary and Rubinfeld (2014).

  24. 24.

    United States v. Phila. Nat’l Bank, 374 U.S. 321, 370 (1963).

  25. 25.

    United States v. Topco Assocs., Inc., 405 U.S. 596 (1972). The dissent and the district court also point to Topco as an authority in this regard. See 138 S. Ct. (2018) (Breyer, J., dissenting), p. 2302; and United States of America et alv. American Express Companyet al, 88 F. Supp. 3d, 229 n. 54 (E.D.N.Y. 2015). On the other hand, the majority points out that in Topco the Court was concerned with horizontal agreements and therefore the ruling was narrower and does not apply to vertical agreements. See 138 S. Ct. (2018), p. 2290 n. 10.

  26. 26.

    On the other hand, if the defendant argues that the benefits to the related market indirectly benefit the market of focus, one could say that Topco and Philadelphia National Bank would not preclude the Court from assessing such evidence. This would certainly depend on how strict the standard of proof of indirect benefits is set. If courts would be required to causally link the indirect benefits to product improvements on the other side, then in practice defendants would find it almost impossible to use this kind of procompetitive justification.

  27. 27.

    138 S. Ct. (2018), p. 2295, Katz and Sallet (2018), pp. 2172–2174, Hovenkamp (2019a), pp. 38–49, Hovenkamp (2019b), p. 122, and Carlton (2019), pp. 11–12.

  28. 28.

    138 S. Ct. (2018), p. 2288.

  29. 29.

    Id., pp. 2289–2290.

  30. 30.

    If a person is freeriding it is because she does not pay for a benefit she enjoys produced by the firm. To prevent her from freeriding, the firm needs to be able to charge her a positive price, in this case increasing it from zero to whichever the profit-maximizing price is. Therefore, to avoid freeriding, the firm must inevitably increase the price paid by the free rider.

  31. 31.

    138 S. Ct. (2018) (Breyer, J., dissenting), p. 2304; and 88 F. Supp. 3d, pp. 235–238.

  32. 32.

    138 S. Ct. (2018), p. 2289.

  33. 33.

    88 F. Supp. 3d, pp. 157–158.

  34. 34.

    138 S. Ct. (2018), p. 2287.

  35. 35.

    Carlton and Perloff (2015), p. 85.

  36. 36.

    138 S. Ct. (2018) (Breyer, J., dissenting), p. 2302.

  37. 37.

    Id., p. 207.

  38. 38.

    Insistence rate is how credit card networks measure the loyalty of cardholders. It is the rate of customers who decide to purchase elsewhere or less if the merchant does not accept its card of preference.

  39. 39.

    88 F. Supp. 3d, at 193–194.

  40. 40.

    Id., at 210.

  41. 41.

    Id., at 160–162.

  42. 42.


  43. 43.

    Id., at 211.

  44. 44.

    Id., at 196–197.

  45. 45.

    Id., at 196.

  46. 46.

    Id., at 196, 215–216.

  47. 47.

    Id., at 216–217.


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Correspondence to Francisco Beneke.

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Beneke, F. Ohio v. American Express and the Balancing of Consumer Welfare Effects on Multiple Sides of a Platform. IIC 50, 917–927 (2019).

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  • Antitrust in multisided markets
  • Platform competition
  • Anti-steering provisions