AMERICAN EXPRESS HAILS SUPREME COURT DECISION AS A VICTORY FOR OPEN COMPETITION AND CONSUMER CHOICE
NEW YORK, October 4, 2004 -- American Express Company today released the following statement from Kenneth I. Chenault, chairman and chief executive officer, in response to the Supreme Court's decision not to hear Visa and MasterCard's appeal in the government's antitrust lawsuit against them.
“Today is an historic day for the card payments industry in the United States. The Supreme Court's decision means the end, once and for all, of Visa and MasterCard rules that have prevented banks from issuing cards on rival networks. In effect, the Court has decided that these rules are illegal and must be abolished. The appeals are over. A new era of greater choice for U.S. consumers and financial institutions has begun.”
The Supreme Court's decision not to consider an appeal caps six years of legal proceedings that began in 1998, when the U.S. Department of Justice sued Visa and MasterCard for limiting competition in the U.S. credit card market. In October 2001, U.S. District Judge Barbara Jones ruled that Visa and MasterCard could no longer bar member banks from issuing cards on rival networks. Over the next few years, Visa and MasterCard tried and failed to have the decision overturned. As a last resort, they unsuccessfully petitioned the Supreme Court to argue their case again.
While this legal process unfolded, American Express built a network business outside of the United States, where similar attempts by Visa and MasterCard to block competition failed. American Express currently has “Global Network Services” (GNS) partnerships with 85 banks in 94 countries. As part of these partnerships, banks issue cards to their customers which are accepted and processed on the American Express global network. With more than 350 different card products launched so far, GNS partners have added more than 7.2 million bank-issued cards and more than three million new establishments to the American Express merchant network.
In the U.S., American Express and MBNA, one of the world's largest card issuers, announced plans in January 2004 for MBNA to issue American Express-branded cards to high-spending customers and prospects, pending resolution of the appeal. MBNA plans to introduce its first cards on the American Express network within weeks.
American Express will also seek partnerships with other U.S. banks. “We plan to add more partnerships with other issuers on a selective basis, ensuring they are a strategic fit for our brand and can drive more high-spending customers to the merchants on our network,” Mr. Chenault said. “Our objectives are to continue to have the strongest proprietary card business in the industry, to be the network of choice for high-spending consumers, and to drive more business and profits to merchants who accept our cards.”
Mr. Chenault noted, as he has done in the past, that American Express is considering bringing private legal action against Visa and MasterCard. “The Supreme Court's ruling only reaffirms the viability of this course of action,” he stated.
Click here for the full text of Mr. Chenault's memorandum to employees on today's Supreme Court decision.
Information Related to Forward Looking
Statements
The above memorandum includes forward-looking statements, which are subject
to risks and uncertainties. The words "believe," "expect," "anticipate,"
"optimistic," "intend," "plan," "aim," "will," "should," "could," "likely,"
and similar expressions are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. The
company undertakes no obligation to update or revise any forward-looking
statements. Factors that could cause actual results to differ materially
from these forward-looking statements include, but are not limited to: the
success of the Company in continuing to grow primarily through organic
expansion of its businesses; any continuing effects of the conduct that was
the subject of the Department of Justice suit against Visa and MasterCard
challenging their restrictions on member banks issuing cards on the American
Express Network in the U.S.; the success of the Company’s GNS business in
the U.S., which will depend in part on the extent to which such business:
further enhances the Company’s brand, increases the number of American
Express-branded cards in the marketplace, allows the Company to leverage its
significant processing scale, expands merchant coverage of the network,
provides U.S. GNS bank partners the benefits of greater cardmember loyalty
and higher spend per customer, and provides merchants benefits such as
greater transaction volume and additional higher spending customers; and the
Company’s ability to grow and manage its proprietary business in the U.S. at
the same time there is expansion in the U.S. GNS business.
