Ohio v. American Express Co. (2018) (modern articulation of rule of reason for vertical restraints)
Holding:
Provides framework for current rule of reason (same as Alston)
(1) P's prima facie case: "the challenged restraint has a substantial anticompetitive effect that harms consumers in the relevant market"
In a case with vertical restraints, P must define the relevant market and provide indirect evidence of anticompetitive effects (direct evidence is insufficient)
Must show harm on both sides of a two-sided transaction platform market (merchants and consumers)
(2) Burden shifts to D, who must "show a procompetitive rationale for the restraint"
(3) Burden shifts back to P to "demonstrate that the procompetitive efficiencies could be reasonably achieved through less anticompetitive means"
Here, P didn't provide indirect evidence of anticompetitive effects, nor did they show that consumers were harmed (ignored one side of the transaction market)
P provided direct evidence that anti-steering leads to higher fees; court responded:
Higher fees also reflect value for consumers (card uses revenue to give perks to consumers)
All card fees have gone up while transaction volume has also increased
There is robust card competition and differentiation
Dissent: Breyer takes issue with each prong of the updated rule of reason framework, with two main points:
(1) Market definition is unnecessary when there is evidence of direct harm: direct harm is worse than indirect harm
Here, there was evidence of merchant fees, merchant testimony, and barriers to Discover expansion (see IN Dental)
(2) P should not have to show harm on both sides of the market: harm to merchants is sufficient for the prima facie case (P also showed increase in fees not completely passed to consumers)
Facts: AmEx (D) uses anti-steering provisions with merchants that prevent them from (1) dissuading customers from using AmEx, (2) persuading them to use other cards, and (3) imposing any special disadvantage on AmEx cards or promoting other cards more than AmEx. Practice challenged as an illegal restraint of trade under S1.
Prof. Note: arguments for and against the anti-steering provision:
For:
D's competitors (like Discover) are excluded from the market because merchants know they can't steer
Against:
There is evidently enough competition between the cards that consumers are going to benefit (e.g., better perks)
Counterpoint: should the consumer benefit count? Only time we really look at this is in NCAA, but that case is weird. Here, the anti-steering provision directly affects the customer experience (prevents merchants from negotiating with customers about which card to use)
Merchants still have the ability to decide whether to accept the card
Case raises the question of whether other two-sided markets should require a showing of harm on both sides of the market (e.g., Google, AI)