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Niamhs
Essay1.docx
Introduction
This is perhaps the most important antitrust case in modern antitrust history. It took 8 years from the initial complaint submitted by the DOJ to District Court to the Supreme Court Decision in 2018. There is a wealth of documentation at the DOJ antitrust division (https://www.justice.gov/atr/case/us-and-plaintiff- states-v-american-express-co-et-al) as well as in many other web sources. I would like you to focus, primarily, on one document: the District Court decision (https://www.justice.gov/atr/case- document/file/485746/download) from February 2015. As you explain the following items, feel free (if you feel compelled) to disagree with the Court’s decision (elaborate on the economic rationale for your disagreement).
Your Job
1. Describe the complaint set forth by the DOJ. Make sure you include:
a. Brief background of the industry. Make sure you describe carefully what characteristics make this industry different from others (i.e. two-sided network).
2. Describe the economic rationale for the relevant product market proposed by the DOJ (and accepted by the Court). Make sure you address:
a. What was the relevant product market adopted?
b. What rationale did the Court use to define the market based on a “network” rather than a “service”?
c. What were the arguments used by the Court to dispute that debit cards should be included in the relevant market? Make sure you provide an intuitive economic explanation of Dr. Katz’ expert testimony regarding the tests he performed to exclude debit cards from the relevant market. What other elements did the Court consider?
3. Discuss how the Court arrived at the conclusion that Amex possessed market power in the relevant market. Make sure you discuss the role of market share as well as other factors that were important in this decision.
