ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, February 8, 1997 TAG: 9702100041
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
The Justice Department is investigating complaints of anti-competitive practices in the credit card industry with an eye toward filing an antitrust suit against Visa and MasterCard, government and industry sources said Friday.
The case flows from complaints by American Express that its two rivals forbid member banks to issue any cards but theirs.
The Justice Department declined to confirm reports that it would soon file an antitrust suit, but public affairs officer Gina Talamona said, ``We're looking at competitive issues involving the prohibition of certain joint ventures in the credit card industry, and that investigation is continuing.''
American Express said its effort to persuade U.S. banks to issue its cards has been unsuccessful because the banks, usually Visa and MasterCard members, were barred by restrictions imposed by the two companies.
``We have a view that banks should be able to choose who they do business with,'' said American Express spokesman Mike O'Neal.
He said American Express has had no such problem overseas, where it has been able to issue cards through more than a dozen banks.
Visa and MasterCard said they are ready to challenge any action initiated by the Justice Department.
``We are confident that our position is in the best interest of the MasterCard brand, our card holders and our members,'' said Eugene Lockhart, MasterCard chief executive.
But Rep. Charles Schumer, D-N.Y., said a successful antitrust action against the two giant credit card companies ``would represent a terrific victory for American consumers.
``I have long believed that Visa and MasterCard have engaged in anti-competitive practices that severely restrict the credit card choices available to the average American.
``And the solution is simple: Banks that issue credit cards should be free to offer any and all products to their customers, opening the market to the widest possible selection at the most competitive prices.
``This Visa-MasterCard bylaw is a flagrant violation of that fundamental principle, and it should be abolished.''
Legal experts say that the case could affect joint-venture law, which governs how companies cooperate with each other. The case also could trigger new partnerships in the U.S. credit card industry.
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