The antitrust trial against MasterCard and Visa will resume Monday with a government witness who is expected to describe American Express Co. discussions with banks that had expressed interest in issuing Amex cards.
Stephan B. McCurdy, an Amex vice president in charge of signing up bank partners in the United States, began testifying late Wednesday. He named several banks that had told American Express they were interested in issuing its card brand: the First USA subsidiary of Bank One Corp., KeyCorp, MBNA Corp., First Consumers, and Advanta Corp. (which issues commercial cards only). After Mr. McCurdy had testified for less than half an hour, the trial was adjourned for the day and a two-day recess was called, so that Judge Barbara S. Jones could attend a judicial conference.
Before Mr. McCurdy the government called John Elliott, a former MasterCard executive, to the stand.
Mr. Elliott testified that MasterCard halted smart card initiatives so it would not come out with a product before Visa. The government sought to show with that testimony that the credit card associations collaborate rather than compete, and that their collaboration has denied significant innovations to consumers.
Mr. McCurdy's testimony is meant to show that because U.S. banks cannot strike deals with Amex and other brands that compete with Visa and MasterCard, consumers have been denied convenience and freedom of choice.
On June 12 the government's lead counsel, Melvin Schwarz, said in his opening remarks that consumers should be able to apply for an Amex card through their banks, because there is clear evidence they "want to have one-stop shopping." A central issue of the government's complaint is that Visa's and MasterCard's rules preventing banks from forming such partnerships with Amex are anticompetitive.
Other American Express executives -- including Harvey Golub, its chairman and chief executive officer -- are expected to support this point, and will testify later as government witnesses.
Next week the government has tentatively scheduled testimony from Kenneth I. Chenault, president and chief operating officer of Amex; James Cracchiolo, president of Amex's subsidiary Travel Related Services Inc.; Alex W. "Pete" Hart, the former chief executive officer of MasterCard; and Christopher Zyda, chief financial officer of Amazon.com International.
Other well-known witnesses are scheduled to appear later in the trial, which is shaping up as a "Who's Who" of the credit card industry. Lists of possible witnesses include everyone from John Reed, the former Citigroup co-CEO who orchestrated its shift from Visa to MasterCard, to John Bennett, the Visa advertising guru who came up with the slogan "They don't take American Express."