UPDATE 3-AmEx loses bid to dismiss currency fee lawsuit

* Judge says jury could find competition was hurt

* Challenge to arbitration clause also allowed to go forth

* American Express shares fall
(Adds details from ruling, AmEx statement, background,
bylines)

By Maria Aspan and Jonathan Stempel

NEW YORK, March 29 (Reuters) – American Express Co (AXP.N: Quote, Profile, Research)
lost its bid to dismiss an antitrust lawsuit accusing it of
conspiring to fix foreign currency conversion fees and imposing
arbitration clauses in cardholder agreements.

U.S. District Judge William Pauley in Manhattan on Tuesday
concluded that a jury could find that conduct by the credit
card and travel services company “caused injury to competition
in the credit card market.”

The lawsuit is part of nearly seven years of litigation by
consumers challenging the imposition by major credit card
issuers of fees, usually 2 or 3 percent, on purchases made in
currencies other than the U.S. dollar.

“We are very pleased with the outcome,” said Charles
Goodwin, a lawyer at Berger & Montague PC representing the
plaintiffs. “The next step is a trial.”

American Express spokeswoman Joanna Lambert said in an
email that the company was “disappointed” with the decision and
intends to continue to vigorously defend against the case.

Increased regulation of the U.S. credit card industry has
made lenders more dependent on foreign exchange and other fees
for revenue.

While a 2008 federal law restricted or eliminated some of
these fees, it did not affect such currency fees.

Visa Inc (V.N: Quote, Profile, Research) and MasterCard Inc (MA.N: Quote, Profile, Research) typically collect
1 percentage point of currency fees on their branded cards,
with issuers collecting the rest.

In the American Express case, the plaintiffs accused the
company of doubling its currency fee to 2 percent in 1999 after
competitors had begun raising their fees, and after a meeting
with some rivals to discuss issues facing the card industry.

Pauley wrote that a jury could reasonably infer that New
York-based American Express and rivals had a “common design” to
impose such fees, even if they did so at different times.

He also said consumers could still pursue antitrust claims
over American Express’ arbitration clauses, though some card
issuers have agreed to remove such clauses for 3-1/2 years.

In December, American Express said it would get rid by the
end of this month of currency fees for U.S. consumer and small
business customers who use its Platinum or Centurion cards.

The Platinum card carries a $450 annual membership fee,
according to American Express’ website.

In afternoon trading, American Express shares were down 0.4
percent at $45.56 on the New York Stock Exchange.

The case is In re: Currency Conversion Fee Antitrust
Litigation, U.S. District Court, Southern District of New York,
No. MDL-1409.
(Reporting by Maria Aspan and Jonathan Stempel, editing by
Gerald E. McCormick and Matthew Lewis)

UPDATE 3-AmEx loses bid to dismiss currency fee lawsuit