Opinion ID: 6330404
Heading Depth: 2
Heading Rank: 1

Heading: pavd

Text: Pulse contends it has antitrust standing to contest Visa’s PAVD program. Pulse alleges the program is an illegal tying arrangement that requires issuers to enable PAVD (and thereby Visa PIN transactions) on any Visa signature debit card. 8 As a result, Pulse can no longer be the exclusive PIN network on Visa cards, and, as merchants choose to route PIN transactions via Visa, Pulse loses transaction volume and revenue. We disagree with Pulse. Before PAVD, Visa debit cards usually included one signature network and one PIN network. Visa reserved the signature slot for itself and, in compliance with the Durbin Amendment, reserved the PIN slot for a nonaffiliate. By obtaining exclusive placement on Visa debit cards as the sole PIN network, Pulse benefited from that effective exclusion of Visa from the PIN network market. But the PAVD program gives merchants a competing option. Whereas Pulse previously was the only PIN network on Visa signature debit cards, PAVD now guarantees merchants the choice of routing PIN transactions via Pulse’s or Visa’s network. As merchants choose Visa’s over Pulse’s, Pulse loses PIN debit volume and revenue. This brings us to the core of Pulse’s alleged injury: merchants, when given the option of Visa (through PAVD) or Pulse, are choosing Visa. Pulse, understandably, would prefer that merchants be denied that choice. Antitrust law does not assist Pulse in achieving that goal. 8 An illegal tying arrangement is one where the seller “exploit[s] . . . its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms.” Ill. Tool Works, Inc. v. Indep. Ink, Inc., 547 U.S. 28, 34–35 (2006) (internal citation omitted); see also Areeda § 340c2, at 170 (“A dominant seller can exploit its market power directly by charging a price higher than the competitive price would be, or indirectly by forcing the buyer to buy a second product. The seller may have reasons to prefer the second route, just as society may choose to condemn it as an unlawful tie, because it ‘introduces an alien factor’ into competition among rival producers of that second product.”). 9 Case: 18-20669 Document: 00516267971 Page: 10 Date Filed: 04/05/2022 No. 18-20669 Loss from competition itself—that is, loss in the form of customers’ choosing the competitor’s goods and services over the plaintiff’s—does not constitute antitrust injury, even if the defendant is violating antitrust laws in order to offer customers that choice. See Brunswick, 429 U.S. at 487–88. A plaintiff that sues a rival, complaining that the rival’s mere presence in the market causes it injury, seeks to gain not the opportunity to compete in the marketplace but only “the benefits of increased concentration.” Id. at 488. Such a plaintiff seeks not “to share shelf space with its competitor” but to have “that shelf space all to itself.” NicSand, Inc. v. 3M Co., 507 F.3d 442, 454 (6th Cir. 2007) (en banc). To be sure, the defendant might have violated the antitrust laws to place itself on the shelf next to the plaintiff, but it would be “inimical to the purposes of [the antitrust] laws” to recognize the plaintiff as being injured by the defendant’s presence on that shelf. Brunswick, 429 U.S. at 488. Pulse has therefore not shown antitrust injury here. 9 Pulse counters that its loss of exclusive-dealing arrangements can constitute antitrust injury because exclusive dealing may be the only way for non-dominant firms, such as Pulse, to compete. We disagree. Pulse cites multiple cases to support its “loss-of-exclusivity” theory of injury. 10 But those cases teach only the well-established proposition that exclusive-dealing arrangements are not per se antitrust violations. 11 Whether exclusive-dealing 9 To be sure, Pulse has shown injury-in-fact. It claims Visa’s conduct caused it to lose PIN debit volume and revenue, and that Visa impeded its efforts to compete with its PINless products. These allegations of economic injury establish injury in fact. See, e.g., Energy Mgmt. Corp. v. City of Shreveport, 397 F.3d 297, 302 (5th Cir. 2005). But Pulse still lacks antitrust standing because of the lack of antitrust injury. ARCO, 495 U.S. at 343–44. 10 E.g., Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 334 (1961); FTC v. Motion Picture Advert. Serv. Co., 344 U.S. 392, 396 (1953); Hornsby Oil Co. v. Champion Spark Plug Co., 714 F.2d 1384, 1392 n.6 (5th Cir. 1983). 11 See Tampa Elec., 365 U.S. at 327 (“In practical application, even though a contract is found to be an exclusive-dealing arrangement, it does not violate [antitrust law] unless the court believes it probable that performance of the contract will foreclose competition in a substantial share of the line of commerce affected.”); Motion Picture Advert., 344 U.S. at 395-96 (recognizing that exclusive-dealing agreements are not per se 10 Case: 18-20669 Document: 00516267971 Page: 11 Date Filed: 04/05/2022 No. 18-20669 arrangements are legal is a question separate from whether conduct that limits exclusivity, like Visa’s here, causes antitrust injury. In this case, the answer is no. Neither does the calculus change if we construe Pulse’s injury as the loss of the ability to negotiate for exclusivity instead of the loss of exclusivity itself. True, Pulse is not exactly suing to deny Visa participation in the market for PIN transactions—even if Pulse’s suit were successful, Visa could still offer issuers incentives to enable PAVD on Visa debit cards, and Pulse presumably would offer competing incentives. And it might be, as Pulse claims, that “many issuers would prefer not to enable PAVD” because the associated transaction fees, though lower for merchants, are higher for issuers. Nevertheless, the injury to Pulse—as distinguished from any possible injury to issuers—is, ultimately, a loss of transaction volume for having to compete with Visa for merchant transactions. 12 That kind of loss is not for antitrust laws to remedy. Brunswick, 429 U.S. at 489. Perhaps exclusive dealing is the only way Pulse can facilitate its expansion as a non-dominant firm. But antitrust law wasn’t made to help a smaller firm expand where competition limits its ability to do so on its own. 13 Congress may enact legislation—such as the Durbin Amendment— specifically to assist smaller firms, but it is not for the courts to retrofit antitrust violations); Hornsby, 714 F.2d at 1392 n.6 (“Exclusive dealing arrangements have not received the more stringent per se treatment.”). 12 This also suggests that parties other than Pulse are better situated to bring suit and that Pulse therefore lacks “proper plaintiff status.” See ARCO, 495 U.S. at 345–46 (noting that “a competitor will be injured and hence motivated to sue only when a vertical, maximum-price-fixing arrangement has a procompetitive impact on the market,” so the competitor’s suit “would not protect the rights of dealers and consumers under the antitrust laws”). 13 See Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 116 (1986) (“[I]t is in the interest of competition to permit dominant firms to engage in vigorous competition . . . .”). 11 Case: 18-20669 Document: 00516267971 Page: 12 Date Filed: 04/05/2022 No. 18-20669 antitrust law to further such goals. 14 Even assuming Visa’s PAVD program is an illegal tie, Pulse’s injury—decreased PIN debit volume and revenue as merchants choose Visa over Pulse—results from increased competition and is therefore not antitrust injury.