Supply and DemandEconomic theory

The D.C. Circuit confirmed in Osborn v. Visa Inc., No. 14-7004 (D.C. Cir. Aug. 4, 2015), that plaintiffs alleging a price-fixing conspiracy may rely on debatable economic theory to plead an adequate basis for antitrust injury.

The case involved claims that Visa, MasterCard, and several banks conspired to force ATM operators not to use lower-cost off-brand networks to process ATM transactions. The plaintiffs alleged that Visa’s and MasterCard’s rules thwarted the ability of competing networks to capture more of the ATM operators’ business, inflating the fees that operators paid networks and that users paid operators.


Reversing dismissal of a class action complaint on behalf of ATM operators and users, the panel rejected the district court’s view that the plaintiffs’ economic theory strayed into the realm of speculation for purposes of assessing their standing to sue:

Plaintiffs also rely on certain economic assumptions about supply and demand: that other consumers besides the Plaintiffs are price conscious; that bank operators will respond to consumer demand for cards tied to low-cost networks; and that in the face of competitive pressure, ATM networks will reduce their network fees. But these sorts of assumptions are provable at trial. . . . Indeed, allegations of economic harm “based on standard principles of ‘supply and demand’” are “routinely credited by courts in a variety of contexts.”

Id., slip op. at 13 (citations omitted).

Concert of action

The court also upheld the allegations about the contract, combination, or conspiracy that section one of the Sherman Act requires.  That a group of member banks set the ATM rules for Visa and MasterCard supplied the necessary concert of action, the panel ruled. It observed:

But the Plaintiffs here have done much more than allege “mere membership.” They have alleged that the member banks used the bankcard associations to adopt and enforce a supracompetitive pricing regime for ATM access fees.

Id. at 16.

Conspiracy from non-competitive cooperation

Osborn suggests, by the way, that the process of fixing prices need not involve head to head competition in order to run afoul of section one. The banks engaged in a cooperative effort — to promote high fees for the Visa and MasterCard networks — in an area where they did not compete directly — fees for network services.

In United States v. Apple Inc. (post here), the Second Circuit ruled 2-1 that the nature of the restraint — and not the process by which it came about — determines whether the per se rule of illegality applies. Osborn accords with that view.