n a major win for American Express Co. and Morgan Stanley's Discover, a federal appeals court three-judge panel ruled that credit card giants Visa and MasterCard must eliminate their exclusionary policies that prevent member banks from also issuing American Express, Discover or other brands of credit cards. The panel agreed with a lower court's 2001 ruling that this requirement hurts competition.

The court found that the rules "have absolutely prevented American Express and Discover from selling their products at all."

American Express said it would start pursuing credit card partnerships with U.S banks right away. It has about 80 bank partners in 80 countries outside the U.S, and has been looking to expand its bank partnerships in the U.S. for several years.

About 20,000 banks issue credit cards through Visa and MasterCard.

"There is a strong interest among banks to partner with us in the U.S. just as they have internationally," Kenneth I. Chenault, Chairman and CEO of American Express said in a statement.

"We expect to have the first of our U.S. bank agreements signed no later than the second half of 2004."

Visa and MasterCard have argued that their policies do not impede competition. They contend the interchange fees American Express charges (which are typically higher than the associations' fees even though the rates tend to fluctuate) hinder its market presence.

"American Express does not have an access problem, they have a product problem," Visa Vice President Daniel Tarman said in an Associated Press story.

Both Visa and MasterCard plan to appeal the ruling, which Chenault called "no more than a delaying tactic" that's likely to run a few more months, not years. He also said American Express is considering pursuing private legal action against Visa and MasterCard.

On the day of the ruling announcement, shares of American Express climbed 3.4%.