[Sasha Volokh] Did banks collude to fix ATM access fees?

Yesterday, I blogged the first part of an antitrust professors’ amicus brief I joined in Visa Inc. v. Osborn, which will be argued before the Supreme Court sometime this Term. This case is about what it takes to make a “conspiracy” within the meaning of antitrust law, and in particular, whether it’s a conspiracy when “members of a business association agreed to adhere to the association’s rules and possess governance rights in the association.”

Today, I’ll give you the last part of that amicus brief.

II. The Complaint Here Does Not Allege Facts Plausibly Suggesting Collusion Among the Defendant Banks

A. A proper application of Twombly and the other cases cited above makes clear that the court of appeals erred in reversing the dismissal of respondents’ complaint.

Respondents allege a horizontal conspiracy among all Visa and MasterCard member banks to adhere to contractual provisions—known as the “Access Fee Rules”—prohibiting ATM operators from charging higher access fees to cardholders for transactions routed over Visa and MasterCard than for transactions routed over another network. Pet. App. 54a-55a, 65a. To support its conclusion that the complaint plausibly stated a section 1 claim based on this alleged conduct, the court of appeals pointed to respondents’ allegations that the Access Fee Rules “originated in the rules of the former bankcard associations agreed to by the banks themselves,” and that representatives of the member banks served on the bankcard associations’ boards of directors at the time the Access Fee Rules were adopted. Id. 20a. From this alone, the court concluded that the plaintiffs had sufficiently alleged that “the member banks used the bankcard associations to adopt and enforce a supracompetitive pricing regime for ATM access fees.” Id.

But these allegations do not plausibly suggest that the member banks entered into any agreement among themselves to establish and adhere to the Access Fee Rules. There is no suggestion, for example, that the banks discussed or agreed among themselves how to vote on the Access Fee Rules, or even that they all voted the same way. Indeed, the allegations here—that “members of a business association agreed to adhere to the association’s rules and possess governance rights in the association,” Pet. i—indicate simply that the member banks unilaterally decided to participate in the associations, contribute to the governance of the association as they saw fit in their individual business judgment, and unilaterally agreed to the Access Fee Rules.

At the petition stage, respondents contended (Opp. 16-17) that they have alleged “more” than mere membership in a trade association. But they never identified what that “more” is. All that respondents have alleged is that individual association members participated in the association’s governance structure and have decided to adhere to the association’s rules. Put differently, although respondents argue that the banks “agreed to th[e] rule and apply it in setting their prices,” id. 10, they never alleged facts plausibly suggesting that the banks agreed with one another to implement the rule. If allegations like those made by respondents suffice to allege a section 1 agreement, then any plaintiff could plausibly plead conspiracy merely by alleging that more than one member of a trade association adhered to an association rule.

Respondents also claimed at the petition stage (Opp. 17) that the approach amici urge “would effectively immunize all trade associations from the antitrust laws.” That is wrong. The lower-court cases discussed above provide a clear roadmap for distinguishing claims that rest solely on membership in an association from those that plausibly allege collusion. It is respondents’ theory that would have far-reaching deleterious consequences, effectively subjecting any trade association member to section 1 liability, expensive discovery, and exposure to treble damages merely for following a rule of the association.

Disputing this, respondents argued (Opp. 16-17) that the requisite agreement can properly be inferred from their complaint because member banks’ continued assent to the Access Fee Rules does not make economic sense absent agreement among the banks. Respondents never explaine