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

Heading: fanf

Text: Pulse also argues it has antitrust standing to contest FANF. It alleges the FANF pricing structure has caused merchants to use its debit network less, decreasing Pulse’s revenue. Visa orchestrates this injury, Pulse claims, in two integrated steps. First, Visa uses its market dominance to foist on merchants a high fixed fee they wouldn’t ordinarily accept. Second, Visa then uses the revenues from that unavoidable upfront fee to artificially lower its per-transaction fees, which effectively forecloses rivals like Pulse from competing. Visa responds that Pulse is really harmed only by the increased competition created by FANF (i.e., cheaper per-transaction fees), rather than some anticompetitive aspect of the pricing structure. And injury from increased competition, Visa reminds us, is no concern of the antitrust laws. We agree with Pulse. Visa might have a point if Pulse were complaining only that Visa had slashed its per-transaction prices. See, e.g., Felder’s Collision Parts, Inc. v. All Star Advert. Agency, Inc., 777 F.3d 756, 760–61 (5th Cir. 2015) (“Low prices benefit consumers and are usually the product of the competitive marketplace that the antitrust laws are aimed at promoting.” (citing Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223 (1993))). Pulse claims more than price competition is afoot, though. After the Durbin Amendment loosened Visa’s grip on the debit network market, Visa began shedding merchants to Pulse and other networks because its pricing wasn’t 14 See Brunswick, 429 U.S. at 488 (“Congress is free, if it desires, to mandate damages awards for all dislocations caused by unlawful mergers despite the peculiar consequences of so doing.”). 12 Case: 18-20669 Document: 00516267971 Page: 13 Date Filed: 04/05/2022 No. 18-20669 competitive on a per-transaction basis. Instead of improving its product or competing on price, however, VISA began charging the FANF to merchants—and then using some of those revenues to reduce pertransaction fees. This integrated fee structure, argues Pulse, forces merchants to pay a higher total cost (fixed plus per-transaction fees) than before, and yet Visa’s market share and profits have recovered. This alleged scheme inflicts antitrust injury on Pulse. Under Pulse’s theory, it doesn’t lose customers to Visa in a fair fight over per-transaction fees. Rather, Pulse loses customers because Visa abuses its dominance in the debit card market. Merchants have no choice but to pay Visa’s high fixed monthly fee. They recoup that expense by routing more transactions through Visa’s network, which charges lower per-transaction fees than competitors. But Visa can achieve that only by leveraging the upfront fees to artificially deflate its per-transaction fees. We must assume this pricing structure violates the antitrust laws. See Sanger Ins. Agency, 802 F.3d at 738; Doctor’s Hosp., 123 F.3d at 306. When we do, the link between Pulse’s injury and Visa’s alleged anticompetitive conduct becomes plain. Pulse is squeezed out of the market because Visa exploits its dominance to impose supracompetitive prices on merchants and simultaneously undercut competitors’ per-transaction fees. That is textbook antitrust injury. See Andrx Pharms., Inc. v. Biovail Corp. Int’l, 256 F.3d 799, 816–17 (D.C. Cir. 2001) (“Irrespective of consumer injury, an excluded competitor . . . suffers a distinct injury if it is prevented from selling its product.”). 15 Visa’s counterarguments do not persuade us. First, Visa argues that Pulse can’t show antitrust injury because “Pulse does not contend that Visa’s lowered per-transaction fees are 15 Pulse obviously suffers injury-in-fact from the FANF, as it contributed to Pulse’s losing volume and market share. These injuries are real harms that Visa allegedly intended to inflict. Allegations of economic harm are enough to establish injury in fact. See supra note 9. The district court plainly erred to the extent it concluded otherwise. 13 Case: 18-20669 Document: 00516267971 Page: 14 Date Filed: 04/05/2022 No. 18-20669 predatory” and “injuries that flow from non-predatory price cuts are not antitrust injuries.” For this argument, Visa relies heavily on the Supreme Court’s ARCO decision. See 495 U.S. at 340. It quotes the Court’s statements that “[l]ow prices benefit consumers regardless of how those prices are set” and that “[w]hen prices are not predatory, any losses flowing from them cannot be said to stem from an anticompetitive aspect of the defendant’s conduct.” Id. at 340–41. Visa’s argument misperceives Pulse’s antitrust claim. Pulse isn’t complaining about low prices but about high prices—i.e., the supracompetitive overall prices Visa can charge merchants by exploiting its market dominance. To be sure, part of Visa’s scheme is to use the upfront fixed fee to artificially deflate its per-transaction charges as to which it faces direct competition. But, as Pulse points out, “that is just a manifestation of an integrated strategy of using market and monopoly power to charge supracompetitive prices.” ARCO is inapposite. There, an oil company allegedly conspired with its dealers to set maximum resale prices for gas. A competitor of those dealers sued on the theory that this was a “vertical, maximum-price-fixing agreement,” at the time a per se Sherman Act violation. 495 U.S. at 331–33. 16 The Supreme Court found the competitor lacked antitrust injury. Id. at 336– 38. The anticompetitive effects of the vertical agreement—while harmful to the dealers bound by it and their consumers—were actually beneficial to the competitor, which could undercut those dealers on prices or services. 17 The Court also rejected the competitor’s alternative argument that the agreement 16 That is no longer the case. See State Oil Co. v. Khan, 522 U.S. 3, 7 (1997) (overruling Albrecht v. Herald Co., 390 U.S. 145 (1968), and holding that an alleged vertical maximum price-fixing agreement is subject to the rule of reason). 17 See id. at 336–37 (“Respondent was benefited rather than harmed if petitioner’s pricing policies restricted ARCO sales to a few large dealers or prevented petitioner’s dealers from offering services desired by consumers such as credit card sales.”). 14 Case: 18-20669 Document: 00516267971 Page: 15 Date Filed: 04/05/2022 No. 18-20669 injured it by setting prices too low. As the Court explained, antitrust injury cannot be founded on a claim that firms have “lower[ed] prices but maintain[ed] them above predatory levels.” Id. at 337. In other words, harm from “nonpredatory price competition” does not arise from “an anticompetitive aspect of the defendant’s conduct.” Id. at 338–39 (citing Brunswick, 429 U.S. at 487); see also Felder’s, 777 F.3d at 760–62. This context shows why Visa’s reliance on ARCO is unavailing. In that case, antitrust injury was absent because the plaintiff competitor was not harmed (and instead was benefited) by the anticompetitive aspects of the alleged antitrust violation. Here, by contrast, Pulse is injured precisely by the anticompetitive aspects of Visa’s conduct, i.e., the integrated FANF structure that excludes Pulse from the market. Moreover, ARCO discussed predatory pricing in the context of antitrust claims targeting the low prices set by a price-fixing agreement. 495 U.S. at 338–41. Pulse, by contrast, isn’t challenging FANF because it imposes low or below-cost pricing. Rather, it argues that FANF abuses Visa’s market power, specifically by imposing supra-competitive prices on merchants while manipulating prices in a way that excludes competitors from the market. Second, Visa argues we should disregard FANF’s integrated pricing structure and instead treat the fixed fees and the per-transaction fees separately. Visa relies on the statement in ARCO that antitrust injury must be “attributable to an anti-competitive aspect of the practice under scrutiny.” ARCO, 495 U.S. at 334 (emphasis added) (citing Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 109–10 (1986)). On this view, Pulse’s injury can be attributed only to the low per-transaction fees—not to the fixed fees—and hence only to the effects of price competition. We disagree. The Supreme Court has time and again reminded us that analysis “rest[ing] on formalistic distinctions rather than actual market realities are generally disfavored in antitrust law.” Am. Express, 138 S. Ct. at 2285 15 Case: 18-20669 Document: 00516267971 Page: 16 Date Filed: 04/05/2022 No. 18-20669 (citation omitted). 18 So we cannot blind ourselves to the ample record evidence that Visa created the FANF to function as an integrated program. As Pulse puts it, “Visa’s fixed fees and per-transaction fees are two components of a single integrated price structure that raises overall prices for merchants while artificially deflating Visa’s per-transaction charges, where Visa faces direct competition from Pulse and others.” Pulse’s claimed injury stems directly from the combined effect of those two components—the fixed fee allowing Visa to subsidize its per-transaction fee, imposing supracompetitive overall costs on merchants while excluding competitors from the market. To separate those components when assessing antitrust injury, as Visa wants us to do, would falsify the “actual market realities” at play here. Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 466 (1992). We won’t do that. Third, Visa claims Pulse is not a proper plaintiff to challenge FANF because merchants and issuers pay the FANF, not Pulse. We again disagree. Antitrust standing requires “proper plaintiff status, which assures that other parties are not better situated to bring suit.” Doctor’s Hosp., 123 F.3d at 305. This inquiry focuses on proximate causation. 19 Our circuit considers factors such as (1) “whether the plaintiff’s injuries or their causal link to the defendant are speculative”; (2) “whether other parties have been more directly harmed”; and (3) “whether allowing this plaintiff to sue would risk multiple lawsuits, duplicative recoveries, or complex damage 18 See also NCAA v. Alston, 141 S. Ct. 2141, 2158 (2021) (“Whether an antitrust violation exists necessarily depends on a careful analysis of market realities.” (citations omitted)); Doctor’s Hosp., 123 F.3d at 305 (explaining “antitrust injury for standing purposes should be viewed from the perspective of the plaintiff’s position in the marketplace”). 19 See, e.g., Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 126 (2014) (citing Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519, 532–33 (1983)). 16 Case: 18-20669 Document: 00516267971 Page: 17 Date Filed: 04/05/2022 No. 18-20669 apportionment.” McCormack, 845 F.2d at 1341; see also Norris v. Hearst Trust, 500 F.3d 454, 465 (5th Cir. 2007). Pulse is a proper plaintiff to challenge FANF. Pulse claims FANF squeezes it out of the debit network market, reducing Pulse’s transaction volume and market share. Based on the record, a reasonable jury could find a non-speculative causal link between these claimed injuries and FANF. See McCormack, 845 F.2d at 1341. 20 Moreover, Pulse’s claimed harm—being driven from the market by FANF’s abusive structure—is distinct from any increased costs FANF may visit on merchants or issuers. Those harms are no more direct than the ones Pulse claims as an excluded competitor. See ibid. 21 Finally, no merchant or issuer could recover for Pulse’s competitive injuries, so there is no chance of duplicative recoveries. Ibid. 22 20 Conceding Pulse has lost volume and market share, Visa attributes those losses to business failures unrelated to Visa’s conduct. Maybe, maybe not. But it is Visa which moved for summary judgment, and so Pulse gets the benefit of all reasonable inferences from the record. La. Crawfish Producers, 852 F.3d at 462. A reasonable jury could conclude from the record that Visa’s policies deprived Pulse of the opportunity to compete for business from at least one major merchant. 21 See also Norris, 500 F.3d at 467 (holding plaintiffs lacked standing because they were “neither consumers nor competitors in the market attempted to be constrained”); TCA Bldg. Co. v. Nw. Res. Co., 861 F. Supp. 1366, 1380 (S.D. Tex. 1994) (“As a competitor for sales . . . in a market which the Defendants have allegedly monopolized, which has allegedly lost sales due to the Defendants’ allegedly unlawful agreement to exclude competitors, no party is in a better position to vindicate the purposes of the antitrust laws than [the plaintiff].”). 22 That is, no merchant or issuer could recover from Visa for Pulse’s lost profits and market share. See, e.g., Den Norske Stats Oljeselskap As v. Heeremac V.O.F., 241 F.3d 420, 438 (5th Cir. 2001) (Jones, J., dissenting) (stating that had the majority reached the issue of antitrust standing, the plaintiff was a proper plaintiff because “[t]here is no suggestion that any unnamed party can seek to recover for the same damages [the plaintiff] suffered” (emphasis added)); see also Andrx Pharm., 256 F.3d at 817 (finding a competitor had antitrust standing because his “alleged injury [was] not measured by or derived from” the injury suffered by “consumer plaintiffs”). 17 Case: 18-20669 Document: 00516267971 Page: 18 Date Filed: 04/05/2022 No. 18-20669