Vertical Restraints in Two-Sided Markets after Ohio v. Amex: Lessons from the FTC Competition Hearings

November 2018

Vertical Restraints in Two-Sided Markets after Ohio v. Amex: Lessons from the FTC Competition Hearings

By Timothy Snyder & Farrell Malone (Latham & Watkins)¹

The recent Supreme Court decision Ohio v. Amex (“Amex”) elicited strong reactions from panelists throughout the Federal Trade Commission’s Hearing #3 on multi-sided platforms.² Several panelists questioned the Court’s reasoning, with one speaker’s describing it as “economically illiterate.”³ Others supported the decision and encouraged the agencies to use their global stage to advocate the views in Amex to countries with less advanced antitrust regimes.⁴ Among the criticisms, two themes emerged. This article discusses both themes and briefly surveys lower court opinions citing to the Amex case to see if these concerns are beginning to appear. Although there are not enough cases to establish a trend, lower courts will likely avoid undue formalism when applying Amex and continue to take a fact-specific approach when analyzing two-sided markets.

The Amex Decision

In Amex, the Court concluded that Plaintiffs failed to prove that anti-steering provisions in contracts between American Express and merchants violated Section 1 of the Sherman Act.⁵  The Court required plaintiffs (1) to define the market in direct-evidence cases involving vertical restraints⁶ and (2) to show a net-anticompetitive effect across two sides of a two-sided transaction platform.⁷

The case turned on market definition