13 October 2004
Don't leave court without it
Bylaw 210(e) is part of the agreement a bank signs with Visa to be able to issue Visa cards. MasterCard's "Competitive Programs Policy" is similar. Both these clauses say basically the same thing: you can offer Visa and/or MasterCard, but no other credit cards.
In 1998, American Express, having been rebuffed in an effort to sign up banks to issue Amex cards, managed to persuade the Department of Justice that these policies were anticompetitive, and the government duly sued.
Three years later, the government won its case: Southern District of New York Judge Barbara Jones ruled that the policies violated antitrust laws. Visa and MasterCard appealed the decision, MasterCard arguing that American Express was not being denied access to customers by these policies. The 2nd District Court of Appeals upheld Judge Jones earlier this year. And the Supreme Court has now declined to hear further appeals, meaning American Express and Discover are now free to contract with banks.
MBNA, the third-largest card issuer (the merged Chase/Bank One is first, followed by Citibank), had already negotiated a deal to issue American Express cards, pending resolution of the suits, and they're ready to go after new and presumably upscale customers.