Photo Credit: Mike Scarcella / ALM

The U.S. Supreme Court justices Monday heard oral arguments in Ohio v. American Express, a case that deals with whether the credit card giant should change its supposed anti-steering practices.

Deborah White, general counsel of the Retail Industry Leaders Association and president of sister organization Retail Litigation Center, said she is hopeful that five of the justices will rule against New York-based American Express Co. RILA and the litigation center represent the interests of some of the nation's biggest retailers.

At the heart of the issue before the Supreme Court is whether Amex's contract provisions with merchants stifle competition. The company, which holds about 26 percent of the market for credit card transactions, has contracts in place that require merchants to agree to pay a higher fee for Amex transactions, but they are not allowed to tell customers this policy is in place. Retailers have taken issue with the fact that they are barred from promoting the use of other credit cards that have lower fees.

White and many prominent retailers have fought for years to have Amex lift its restrictions, most recently asking the high court to overturn the U.S. Court of Appeals for the Second Circuit's decision to allow Amex's practice to stay in place.

In-house lawyers from Walmart Stores Inc., Target Corp., The Home Depot Inc., Sears Holdings Management Corp. and Jo-Ann Stores signed onto an amicus brief with RILA, which was filed in December.

“Amex prohibits merchants from truthfully telling their customers that Amex is a higher-fee credit card,” the Dec. 14 brief stated. “It likewise prohibits merchants from giving their customers any incentive to pay with lower-fee cards … Amex's so-called Non-Discrimination Provisions (NDPs)—actually restrain competition among card networks, cause merchants to pay them higher fees and lead to increased prices for all consumers whether they pay by card, cash, check or using government benefits.”

The brief continued, “On the merchant side, Amex has prevented other card networks from competing on price. On the cardholder side, Amex prohibits consumers from receiving truthful information and the price signals that they would ordinarily receive in a competitive market … As we move ever closer to a purely electronic economy, the opportunities and incentives for those with market power to throttle competition will be manifold. This court should not invite such abuses.”

The National Retail Federation, another major retailers' group, was among those that signed on to the Dec. 14 brief as well.

“Transparency is a vital first step toward bringing credit card swipe fees under control,” NRF general counsel Stephanie Martz said in a statement in December. “These rules amount to a gag order on retailers educating their customers about the high cost of credit card fees or encouraging them to use cards that carry lower fees.”

In Monday's arguments, the justices spent a significant amount of time trying to clarify what constitutes an antitrust violation in the context of this case, and how the analysis should be conducted. White, in an interview with Corporate Counsel Monday, said that after attending and hearing the oral arguments, she is “cautiously optimistic that enough of the justices recognize the challenges that anti-steering rules place in terms of competition and how those rules disadvantage consumers at the end of the day.”

White was encouraged by the line of “cogent” questioning presented by Justices Sonia Sotomayor and Elena Kagan.

“They really demonstrated clarity and understanding of the real-world impact of the case and what that meant in terms of antitrust and for consumers,” White said Monday, noting that she is looking forward to an opinion, which she anticipates will come down in June.

Justice Neil Gorsuch appeared to show the most support for Amex and started the hour-long arguments by pressing hard with his questions directed at Eric Murphy, state solicitor representing Ohio and the 11 other states that brought this litigation.

Malcolm Stewart, deputy solicitor general for the U.S. Department of Justice, argued on behalf of the federal government, and Evan Chesler, partner and chairman with Cravath, Swaine & Moore, argued on behalf of Amex.