American Express Sues Rivals
American Express Co. sued Visa International Inc. and MasterCard International Inc. on Monday for imposing rules, later overturned by the courts, that barred thousands of banks from issuing its credit card.
The suit, which also names eight banks as defendants, seeks billions of dollars in damages. Among the banks cited are J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. and a unit of Household International Inc., all of which were members of Visa’s or MasterCard’s board.
The antitrust suit filed in New York follows court decisions striking down Visa and MasterCard rules that blocked 20,000 banks and other financial institutions that issued their cards from also distributing American Express cards. The U.S. Supreme Court last month refused to hear appeals from San Francisco-based Visa and MasterCard, which is headquartered in Purchase, N.Y.
“The federal courts have already found that Visa and MasterCard broke the law,” said Kenneth Chenault, chairman of New York-based American Express, the No. 4 U.S. credit card issuer.
“The card associations functioned as a cartel. Banks who had expressed an interest in working with us were stopped before they could start.”
American Express shares rose 37 cents to $56 on the New York Stock Exchange.
MasterCard spokeswoman Sharon Gamsin said American Express would face “significant obstacles that the government didn’t face.” She said the Justice Department had to show that consumers were injured by the rules; American Express would have to show specifically how it was injured.
Daniel Tarman, senior vice president of Visa USA, said, “Visa will vigorously fight this lawsuit because American Express already got what it wanted from the court -- the ability to issue its products through Visa members. It’s time for American Express to stop looking to the courts to solve its problems and compete in the marketplace instead.”
J.P. Morgan and Bank of America declined to comment. HSBC Holdings, which owns Household International, didn’t have an immediate comment.