US court slaps down Visa and MasterCard

US court slaps down Visa and MasterCard

A US district court judge has ruled that Visa International and MasterCard must allow banking members to issue cards from non-affiliated rivals such as American Express or Morgan Stanley Discover.

The ruling by Judge Barbara Jones stems from a US government antitrust lawsuit brought against Visa and MasterCard in 1998, which claimed exclusionary rules preventing banks from issuing rival cards were anticompetitive.

The Judge however stopped short of agreeing to calls for the break-up of the card networks, saying government lawyers had failed to prove that bank-ownership of MasterCard and Visa stifled competition between the two.

American Express, which has so far been marketed through direct mail to consumers, says it will immediately renew talks with a number of banks about possible card-issuing ventures. Kenneth Chenault, Amex chairman and CEO, states: "The decision is a win for the American consumer. It will ultimately lead to more competition and a broader choice of innovative products. The decision is also a clear loss for Visa and MasterCard, and it illustrates how they have broken the law over a long period of time."

Visa and MasterCard say they are considering the ruling and will decide whether to appeal.

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