Judge rules credit-card giants cannot bar other cards

Visa and MasterCard cannot prevent their member banks from issuing American Express or Discover cards. In a ruling that will revamp the highly competitive credit-card industry, Judge Barbara Jones said Tuesday Visa and MasterCard must let their member banks issue their rivals’ cards. In her ruling, Judge Jones said that while abolishing the exclusionary rules will undoubtedly help American Express Co. and Morgan Stanley’s Discover, its primary effect will be to increase competition and consumer welfare. However, in a partial win for Visa and MasterCard, the judge stopped short of forcing the networks to change their governance structure. The networks are owned by banks that are allowed to have significant interests in both of them, a policy the government said had stopped them from competing. “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.” The case against Visa and MasterCard stems from a 1998 U.S. government antitrust suit accusing the companies of colluding to stifle innovation and not truly competing with each other.