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American Express Appeals Anti-Steering Permanent Injunction to Second Circuit

Last Thursday, American Express appealed the District Court for the Eastern District of New York’s February ruling that its anti-steering rules violated Section 1 of the Sherman Act.  The court entered a permanent injunction in April requiring American Express to change its anti-steering rules and allow merchants to steer customers to use other credit cards or other forms of payment.

Citing concerns such as increased competition, the disruption of its business model, and having to renegotiate numerous contracts with merchants, American Express asked the court to stay the injunction while it appealed the court’s decision.  The court denied that request and stated that any possible economic harm to American Express would not threaten its existence given its demonstrated ability to adapt its business practices when necessary.  The court determined the most significant factor weighing against staying the injunction would be the continued harm caused by the anti-steering rules to the public and merchants.  The court further noted that “[a] lengthy stay pending appeal would necessarily prevent the court from” using “its broad discretion under the Sherman Act to remedy the negative consequences caused by an antitrust violation and to prevent recurrence of the violation.”

Notwithstanding its ruling, the court did enter a temporary stay of the permanent injunction for 30 days to allow American Express to seek a stay pending appeal from the Second Circuit.  We’ll continue to monitor the proceedings in the Second Circuit.