What Is the Best Way to Improve Competition in Modern Capitalism?
Regulating digital platforms to ensure fairness and privacy is essential, says Charlotte Grace
By Charlotte Grace
Through the noise of the decision in America’s Supreme Court to uphold President Trump’s travel ban, and the deliberation over Justice Kennedy’s replacement, one of the most important antitrust rulings in recent years slipped past largely unnoticed. In Ohio v American Express, the Court ruled in favour of American Express, allowing it to prevent merchants from “steering” consumers away to cheaper payment methods such as cash, Visa or Mastercard.
The case might seem anodyne but it touches on one of the biggest challenges facing competition policy practitioners today: how to deal with firms serving two distinct groups of customers. As digital platforms become increasingly pervasive and powerful, ensuring that they act fairly is a crucial matter.
American Express provides a service both to merchants and consumers: receiving and processing payments for merchants, and providing payment methods to consumers. Traditional analysis, which considered only the direct effect on merchants, implied anti-competitive behaviour. American Express’s anti-steering practices raise the price paid by…