Document ID: ./input/supremecourt_opinions/opinions/17pdf/16-1454_5h26.pdf
Page Number: 1.0

(Slip Opinion) 

OCTOBER  TERM,  2017 

1 

Syllabus 

NOTE:  Where  it  is  feasible,  a  syllabus  (headnote)  will  be  released,  as  is
being  done  in  connection  with  this  case,  at  the  time  the  opinion  is  issued.
The  syllabus  constitutes  no  part  of  the  opinion  of  the  Court  but  has  been
prepared  by  the  Reporter  of  Decisions  for  the  convenience  of  the  reader. 
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

OHIO ET AL. v. AMERICAN EXPRESS CO. ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 
THE SECOND CIRCUIT 

No. 16–1454.  Argued February 26, 2018—Decided June 25, 2018 

Respondent  credit-card  companies  American  Express  Company  and 
American  Express  Travel  Related  Services  Company  (collectively, 
Amex) operate what economists call a “two-sided platform,” providing 
services to two different groups (cardholders and merchants) who de-
pend on the platform to intermediate between them.  Because the in-
teraction  between  the  two  groups  is  a  transaction,  credit-card  net-
works  are  a  special  type  of  two-sided  platform  known  as  a 
“transaction”  platform.    The  key  feature  of  transaction  platforms  is
that they cannot make a sale to one side of the platform without sim-
ultaneously making a sale to the other.  Unlike traditional markets, 
two-sided  platforms  exhibit  “indirect  network  effects,”  which  exist 
where  the  value  of  the  platform  to  one  group  depends  on  how  many
members  of  another  group  participate.    Two-sided  platforms  must
take these effects into account before making a change in price on ei-
ther side, or they risk creating a feedback loop of declining demand. 
Thus, striking the optimal balance of the prices charged on each side
of  the  platform  is  essential  for  two-sided  platforms  to  maximize  the
value of their services and to compete with their rivals. 

Visa and MasterCard—two  of the major players in the credit-card 
market—have  significant  structural  advantages  over  Amex.    Amex 
competes  with  them  by  using  a  different  business  model,  which  fo-
cuses on cardholder spending rather than cardholder lending.  To en-
courage cardholder spending, Amex provides better rewards than the
other  credit-card  companies.    Amex  must  continually  invest  in  its
cardholder rewards program to maintain its cardholders’ loyalty.  But 
to fund those investments, it must charge merchants higher fees than
its rivals.   Although this business model  has stimulated competitive
innovations  in  the  credit-card  market,  it  sometimes  causes  friction