American Express Stock Down After Antitrust Ruling

Shares of American Express Company AXP were trading down 2 percent on Thursday after a judge ruled that the company’s merchant rules violate antitrust laws.

The Ruling

The original lawsuit against American Express was filed in 2010. The Justice Department claimed that American Express’ rules forbidding merchants from telling customers they prefer one card over another inhibit free market competition and ultimately result in higher fees.

In his ruling issued Thursday, U.S. Judge Nicholas Garaufis ruled against American Express, agreeing that the merchant rules “constitute an unlawful restraint on trade.”

More Bad News For American Express

The unfavorable court ruling comes just days after American Express and Costco Wholesale Corporation COST announced that they could not reach an agreement to extend a 16-year partnership. In addition, JetBlue Airways JBLU also recently nixed its American Express co-branded card.

Fighting Back

American Express quickly issued a statement on Thursday announcing plans to appeal the court ruling. “The court’s ruling will not provide any benefit to consumers and will, in fact, harm competition by further entrenching the two dominant networks,” the statement said.

American Express’ merchant rules at the center of the dispute prevent merchants from influencing customers to use cards of American Express rivals Visa V and MasterCard MA.

What Does It Mean For Shareholders?

American Express stock has had only a negative reaction so far, recently trading at $78.32 (down 1.8 percent) while shares of Visa and MasterCard were up slightly on the news. In recent filings, American Express has indicated that an unfavorable ruling in the case could have a “material adverse effect on our business.”