The US Supreme Court [official website] held [opinion, PDF] Monday that steering practices by the credit card company American Express that contractually barred merchant customers from steering cardholder customers to credit cards with lower prices are not a violation of federal antitrust law.

In Ohio v. American Express Co. [docket], a group of states argued that under Section 1 of the Sherman Act [text], American Express participated in anti-competitive practices by stifling competition among credit card companies and failed to establish any pro-competitive benefits.

Ohio and other states argued [JURIST report] that it showed “anti-competitive harm” “by proving that American Express’ anti-steering provisions have stifled interbrand price competition.” Therefore, the burden would shift to American Express. The US of Appeals for the Second Circuit held [opinion, PDF] that the government had to show contractual provisions not only had anti-competitive effects, but those effects outweighed any benefits on the cardholder side in order to burden American Express with having to prove pro-competitive benefits. The Supreme Court affirmed Monday 5-4.

Justice Clarence Thomas, writing for the majority, said that the states had not carried their burden to prove anticompetitive effects in the relevant market. “The plaintiffs stake their entire case on proving that Amex’s agreements increase merchant fees. We find this argument unpersuasive.”

“Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit-card transactions. And it is ‘[t]he promotion of interbrand competition,’ after all, that is … ‘the primary purpose of the antitrust laws.'”