The Supreme Court Devastates Antitrust Law
Obscured by the destructive chaos of the Trump administration, a far more chillingly efficient assault on America is underway: a hard march backward to laissez-faire economic policies of a sort not seen since the late 19th century. Last year, Congress did its part by cutting corporate taxes. And on Monday, in Ohio v. American Express, the Supreme Court delivered a big blow to antitrust law and its traditional mission of helping consumers and fostering economic competition.
With its five more conservative justices in the majority, the court ruled 5-4 in favor of American Express and its “gag orders” — which forbid merchants that contract with American Express from encouraging customers to use other credit cards — even though these restrictions are blatantly anticompetitive and raise prices for consumers. The court offered a weak, highly abstract decision that masks the economic extremism of its ruling, which will further enrich Wall Street intermediaries at the expense of both merchants and consumers.
One of the ways the American economy deviates from textbook capitalism is that prices are often hidden from consumers, interfering with the process by which competition is supposed to work. An example central to the American Express case is how we pay to use our credit cards. In addition to annual fees, interest charges and other, more mysterious fees that consumers pay, credit card companies also levy fees on merchants: usually a flat fee per sale and a commission of 2 percent to 3.5 percent or more. If you spend $200 at a store and use a credit card, you could be sending as much as $7 of that payment to the credit card company.
Merchants, no fools, pass those fees on to consumers by making their products more expensive. This yields a credit card “tax” that everyone pays (even those, usually the poor, who don’t have credit cards).
There is no reason to expect credit card companies to offer their services free. But the credit card tax paid by American retailers and consumers is the highest in the world. Credit card “swipe” fees account for an estimated $42 billion every year in the United States. The Europeans pay less, because they see this as an obvious market failure and limit the commission to 0.3 percent, meaning that you would pay 60 cents instead of $7 in fees for that $200 purchase. We rely on the “American way” — competition instead of regulation to keep prices lower — but that works only if we prevent companies from thwarting competition.
Unfortunately, credit card companies like American Express have managed to stymie fee competition with those gag orders on merchants who contract with them.'>>>
https://www.nytimes.com/2018/06/26/opinion/supreme-court-american-express.html?
