American Express Settle for $1.8 Billion

American Express sued larger competitors MasterCard and Visa Inc. in November 2004 after the U.S. Supreme Court ruled they violated antitrust laws by preventing member banks from offering rival cards.

 MasterCard Inc., the world's second-
biggest credit-card network, agreed to pay as much as $1.8 billion to
settle a complaint that it blocked banks from issuing American
Express Co. cards.
The agreement will cost MasterCard
about $1 billion over three years after taxes, the Purchase, New
York-based company said today in a statement. New York-based American
Express, the third-largest credit-card network, said the payments
will act as a cushion against borrower defaults, which are likely to
be more than expected.
Citigroup Inc. and Bank of America
Corp., the two biggest U.S. banks, later agreed to offer American
Express services.
The antitrust settlement we've reached
with MasterCard provides us with a multi-year source of funds that
should, among other things, help to lessen the impact of this
weakening economic cycle,'' said American Express Chief Executive
Officer Kenneth Chenault in a separate statement.
Chenault also said that business
conditions continue to weaken in the U.S. and so far this month we
have seen credit indicators deteriorate beyond our expectations.''