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To: Gary H who wrote (78203)	10/9/2001 10:56:45 PM
From: long-gone	Respond to of 116753

I can't quite figure how this is good for gold, but when the number of players in the alternate plastic money is increased it can't be all that bad. Tuesday October 9, 8:12 pm Eastern Time Visa, MasterCard ordered to open up card market (UPDATE: Adds Visa comments in paragraph eight) By Mary Kelleher NEW YORK, Oct 9 (Reuters) - U.S. credit card networks Visa U.S.A. and MasterCard on Tuesday were ordered to end a policy blocking member banks from issuing rivals' cards, in a federal court ruling that hands a landmark victory to American Express Co.(NYSE:AXP - news) and Morgan Stanley(NYSE:MWD - news). ADVERTISEMENT The ruling could shift the balance of power in the highly competitive card industry, taking away market share from Visa and MasterCard and giving it to American Express and Morgan Stanley's Discover unit. Visa and MasterCard now control more than 75 percent of U.S. credit card sales. The U.S. government sued them in 1998, accusing them of breaking antitrust law. But, in a partial win for Visa and MasterCard, Judge Barbara Jones stopped short of forcing the networks to change their governing structure. The networks are owned by major banks that can have significant interests in both of them, a policy the government also said hindered competition. ``The court finds that the government has failed to prove that the governance structures of the Visa and MasterCard associations have resulted in a significant adverse effect on competition or consumer welfare,'' Jones wrote in a ruling of more than 150 pages. ``However, the proof clearly shows that the exclusionary rules and practices of the defendants have resulted in such adverse effect and should be abolished.'' Visa and MasterCard said they were reviewing the judge's decision but stood behind their rules for member banks. MasterCard said it was strongly considering an appeal, although it and Visa welcomed the judge's decision on governance. ``We take issue with the judge's decision because American Express has access to American consumers and is not foreclosed from the marketplace,'' MasterCard General Counsel Noah Hanft told Reuters. ``We believe we have a strong legal basis to challenge the decision if we decide to appeal.'' Visa spokesman Kelly Presta said that it was ``dismayed that the Court has seen fit to change the structure of the business with untested remedies and unknown consequences.'' Financial services firm American Express, known for its ubiquitous green charge cards, hailed the judge's ruling and said it would resume discussions with a number of U.S. banks about possible card-issuing deals. ``Today's decision is a win for the American consumer,'' said American Express Chairman and Chief Executive Kenneth Chenault. ``It will ultimately lead to more competition and a broader choice of innovative products. The decision is also a clear loss for Visa and MasterCard, and it illustrates how they have broken the law over a long period of time.'' The ruling could be a boon to American Express at a rough time. The company cannot occupy its downtown Manhattan headquarters after two hijacked planes toppled the nearby World Trade Center. It already has said its third quarter profits will miss Wall Street estimates, after the Sept. 11 attacks stopped consumers from traveling and spending money. ``This decision has the potential to change the way the card business looks in the United States,'' said Bear Stearns credit card industry analyst David Hochstim. ``If Visa and MasterCard don't appeal, it could be a big positive for American Express and alter the competitive landscape.'' The ruling also might make American Express a more appealing takeover target for a U.S. bank interested in expanding its cards business and gaining customers. ``It's only upside for American Express,'' Deutsche Banc Alex. Brown's Mark Alpert said of the ruling. The U.S. government also applauded the ruling on the networks' bylaws and said it was weighing its options regarding the ruling on the networks' governance structure. ``The court agreed with the government's position that Visa and MasterCard each have market power in the credit card network market, and that their exclusionary rules which prohibit member banks from issuing cards on other credit card networks illegally restrained competition,'' the government said. The Department of Justice battled Visa and MasterCard all summer last year in a Manhattan federal court, accusing the networks of colluding to stifle innovation and of failing to truly compete with each other. It took issue with the networks' allegedly exclusionary rules, Visa U.S.A. bylaw 2.10(E) and MasterCard's Competitive Programs policy, and its governance structure. These bylaws weaken competition and harm consumers by limiting the numbers of American Express and Discover cards in the United States, and restricting the competitive strength of American Express and Discover by cutting down the numbers of merchants that accept the cards, Jones wrote. They also depriving consumers of the ability to get credit cards that combine features from their bank with their chosen card brand. But with the exception of the networks' failure to name each other in their advertising, which she called a dated example, the government failed to prove the dual governance policy hurt innovation or competition, Jones wrote. biz.yahoo.com