(Reuters) - American Express Co (AXP.N) can once again enforce its rules prohibiting merchants from steering customers to other credit cards after an appeals court temporarily lifted an earlier court order on Friday.
The 2nd U.S. Circuit Court of Appeals is currently weighing American Express’ appeal of the earlier order, handed down by a lower court in April. It decided to lift the order until it decides the appeal.
The 2nd Circuit’s ruling comes the day after it heard oral arguments in the case.
American Express is appealing an April 30 order by Judge Nicholas Garaufis in Brooklyn federal court. The order followed his finding in February that the credit card companies’ rules harmed competition and violated U.S. antitrust laws.
The U.S. government and 17 states sued American Express in the Brooklyn court in 2010, alleging it broke antitrust law by forbidding merchants from steering consumers toward cards with lower “swipe fees.” These are charges that must be paid by a merchant for accepting a credit card payment.
American Express’ rules forbid merchants from offering consumers discounts, rebates or other incentives for using lower-fee cards, or from telling consumers which cards they prefer. Friday’s ruling means the company can once again enforce those rules.
Card companies charge merchants more than $50 billion a year to process consumer transactions, the government said in February. Those fees have also spurred years of litigation by the merchants against the card companies.
American Express said in a statement that it was “encouraged” by the 2nd Circuit’s decision on Friday.
“As we have consistently maintained, we do not believe the initial trial court’s ruling would provide any benefit to consumers and would harm competition by further entrenching the two dominant networks,” the company said.
The Justice Department declined to comment.
The case is United States v. American Express Co, U.S. Court of Appeals, 2nd Circuit, No. 15-1672.
Reporting by Brendan Pierson in New York; Editing by Leslie Adler and Matthew Lewis