American Express 2003 Annual Report Download - page 15

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acquiring partners have added more than 2.5 million new establishments to the American Express network
around the world.
We are excited about the possibilities of further expanding this part of our business through partnerships with
U.S. banks.
Visa’s and MasterCard’s anti-competitive rules in the United States have prevented their member banks from
issuing cards in partnership with other networks, including American Express. In October 2001, a U.S. District
Court held that those rules violated antitrust law. A three-judge panel of the Second Circuit Court of Appeals
affirmed that decision in September 2003. Moreover, in January 2004, Visa’s and MasterCard’s petitions for
rehearing by the full Second Circuit court were denied. While Visa and MasterCard have announced they intend
to ask for review by the U.S. Supreme Court, and they have obtained a further stay of the District Court’s judg-
ment, we believe the court’s rulings are correct and that the legal process should run its course later this year.
Following the appellate court rulings, we renewed our discussions with banks about establishing network part-
nership agreements in the United States. There is a strong interest among banks to partner with us in the United
States, just as they have done internationally.
This was proven in January 2004, when we announced our first major network deal in the United States with
MBNA, one of the world’s largest and most successful credit card issuers. MBNA will offer a new line of card
products that will carry the American Express logo and will be accepted by the millions of merchants world-
wide who welcome American Express cards. Details of the products, which MBNA will market to its high-
spending cardholders and prospects, will be announced later this year. MBNA will also continue to issue cards
on the Visa and MasterCard networks.
This is a milestone agreement for us, as well as for the entire U.S. credit card industry. Once banks are finally
free to issue cards on whichever networks they choose, we will see increased competition, which will spur more
innovation that will deliver greater value to merchants and increased benefits for consumers. We have tremen-
dous respect for MBNA, and we are delighted they are joining with us to open the door to true competition and
more choice. We look forward to introducing products with them later in 2004, after the appeals process in the
Department of Justice case has ended. We will also continue to talk with other banks and financial institutions
as we look to form additional card-issuing partnerships in the United States.
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