Dr. Frankel Publishes Article in ABA Antitrust Magazine

Coherent President Dr. Alan Frankel recently published an article titled “Another Side to the Story: American Express and the Quest for Efficient Payments Systems” in Antitrust Magazine.  The article offers a critique of the Supreme Court’s decision in Ohio v. American Express, along with thoughts about the potential consequences of the decision and how parties should react to it.

The full article can be viewed here.

In American Express, the Court accepted Amex’s “two-sided market” defense of its “non-discrimination provisions” (NDPs) which prohibit merchants that accept Amex cards from discouraging the use of Amex cards or encouraging the use of alternative, lower cost card brands. Amex argued that its relatively high merchant fees were necessary to fund benefits provided to cardholders, such as Amex’s “rewards” program. Dr. Frankel explains that Amex’s NDPs created and exploited an externality and resulted in inefficiency, rather than create an efficient outcome.

Defenders of American Express’s NDPs contend the economic framework of two-sided markets justifies the NDPs because the NDPs sustain greater benefits provided to merchants’ cardholder customers. But that is a fallacy. It is the NDPs themselves that ensure that American Express retains the economic features of a two-sided platform.
— Dr. Alan Frankel

Dr. Frankel has been an economic consultant and expert witness since 1985 and is one of the world's leading experts in the analysis of competition in payment systems and networks. He is an Adjunct Professor at the Loyola University Chicago School of Law where he teaches Law and Economics. He is also a member of the U.S. Advisory Board at the Institute for Consumer Antitrust Studies and a Senior Editor of the Antitrust Law Journal.

Dr. Alan Frankel, Coherent President

Dr. Alan Frankel, Coherent President