t's being hailed as a victory for the free market and consumer choice. Ending six years of litigation, on Oct. 4, 2004 the U.S. Supreme Court issued a decision by refusing to hear an appeal in the antitrust suit brought against Visa U.S.A. and MasterCard International by rivals American Express Co. (AmEx) and Morgan Stanley's Discover Card.

The suit claimed that the two biggest card Associations violated U.S. antitrust laws by barring their member banks from issuing credit cards for competing brands. The Supreme Court denied the appeal by Visa and MasterCard and let stand a decision made previously by a lower court.

That ruling came in 2003 in the U.S. Court of Appeals for the Second Circuit. At that time, the appellate court said, "Without doubt, the exclusionary rules in question harm competitors." The court also said that because of the scope and breadth of the Associations' market power, "no U.S. bank has been willing to give up its membership in the Visa U.S.A. and MasterCard networks in order to issue Discover cards."

The High Court justices, however, provided no comment in declining to hear the appeal; their decision now makes it possible for banks to issue multiple brands of cards.

In January 2004, anticipating the Court's decision, AmEx announced it had reached an agreement with MBNA to issue credit cards under its brand in the United States.

MBNA is already the world's largest issuer of Visa- and MasterCard-branded credit cards. The alliance with AmEx means MBNA will be the first financial institution to participate in all three major networks. It's also the first time that a financial institution will issue AmEx-branded products.

At the time the agreement with AmEx was announced, MBNA said it would issue the cards and process the transactions over AmEx's network, rather than through systems owned by Visa or MasterCard. The existence of three networks is expected to increase competition and promote innovation.

AmEx currently processes one-fifth of all credit transactions and is expected to establish alliances with other banks by the end of this year; the number of merchants accepting the brand is also expected to increase.

For its part, Discover Financial Services, a division of Morgan Stanley and issuer of Discover-branded cards, didn't waste any time. Immediately following the Supreme Court's decision, attorneys for Discover filed a new lawsuit against the Associations in federal court in New York seeking unspecified damages "for harm caused by anticompetitive business practices."

Lloyd Constantine, who represented merchants in the class-action debit card antitrust suit against the Associations, is the lead attorney for Discover. Visa and MasterCard opted to settle that class-action suit in April 2003 and will pay out more than $3 billion to merchants over the next 10 years.

It's unclear whether AmEx will file a similar suit.

MasterCard General Counsel, Noah Hanft, said that in all likelihood, Visa alone will be liable for any damages in this newest suit, which he said focuses on debit cards. He said MasterCard did not have a policy regarding debit products and so were not addressed by the trial court's ruling.

Some industry experts see a long, litigious road ahead for Visa and MasterCard as they could face years full of lawsuits brought by other networks that believe they were harmed by the Associations' restrictive policies.

Retailers, including the National Retail Federation (NRF), applauded the Supreme Court's October 4 decision as a follow-up to the 2003 ruling in the Visa/MasterCard/Wal-Mart debit interchange rate suit.

"This [most recent] decision clears the way for increased competition in the credit card marketplace that should lead to lower costs for retailers and the consumers we serve," NRF Senior Vice President and General Counsel Mallory Duncan said in a statement.

"This case is another victory in creating a level playing field between retailers and credit/debit card companies."

NRF was a lead plaintiff in that federal class-action lawsuit, which ended Visa's and MasterCard's "honor all cards" policies requiring merchants to process costly offline signature debit transactions; it also resulted in reduced rates for processing online PIN transactions.

The antitrust suit was only one of those heard on "First Monday" as the Supreme Court convened for the 2004 - 2005 session. The Court returns to the bench every October and faces a full docket of cases.