Friday, April 10, 2009
Posted by D. Daniel Sokol
Steven Semeraro, Thomas Jefferson School of Law, offers The Economic Benefits of Credit Card Merchant Restraints: A Response to Adam Levitin.
ABSTRACT: Adam Levitin's article, "Priceless?: The Economic Costs of Credit Card Merchant Restraints," 55 UCLA L. Rev. 1321 (2008), argues that credit card systems violate the U.S. antitrust laws by prohibiting merchants from surcharging credit card transactions and refusing to accept high-priced reward cards. If merchants could engage in these practices, Levitin contends, they would effectively combat credit card system market power and drive down acceptance fees.
In this Essay, Steven Semeraro criticizes Levitin's proposal, arguing that surcharging and selective refusal would be ineffective tools in the fight against anticompetitive credit card acceptance fees, because merchants are unlikely to increase their prices by the amount necessary to counteract anticompetitive overcharges without also stifling efficient card use.