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American Express loses emergency bid to block U.S. card injunction

By Jonathan Stempel

NEW YORK, June 16 (Reuters) - A federal appeals court on Tuesday rejected American Express Co's emergency request to halt an injunction that requires the company to let merchants steer customers toward lower-cost cards offered by competitors.

The 2nd U.S. Circuit Court of Appeals in New York nonetheless said it will hear American Express' appeal in the underlying antitrust case on an expedited basis.

American Express is appealing a Feb. 19 decision by U.S. District Judge Nicholas Garaufis in Brooklyn, New York that its rules preventing merchants who accept its cards from recommending that customers pay with other cards, such as MasterCard and Visa, violate antitrust laws.

The judge's April 30 injunction against enforcing these rules also lets merchants offer discounts, rebates and other incentives to customers for using other cards with lower fees.

Garaufis has said American Express' practices wrongfully exploited the New York-based company's 26.4 percent share of purchase volume in the U.S. credit and charge card market.

"We are disappointed the request for a stay was denied," American Express said in a statement on Tuesday. "We will move forward to modify the non-discrimination provisions in our merchant contracts, per the trial court's remedy."

American Express has argued that enforcing the injunction would "weaken competition and harm consumers" in the $2.4 trillion U.S. credit card industry, and cause irreparable harm by costing it revenue and market share.

It has said the February decision, if upheld, would help entrench Visa Inc and MasterCard Inc, which together have more than 1.1 billion cards in the United States versus American Express' roughly 55 million. American Express said its card holders spend three to four times more, on average.

Garaufis ruled in a lawsuit filed in 2010 by the U.S. government and 17 states.

Visa and MasterCard were also sued by various governments over their anti-steering rules for merchants but settled in 2011 by agreeing to make changes.

Card companies charge merchants more than $50 billion a year to process consumer transactions, the U.S. government has said.

The case is U.S. et al v. American Express Co et al, 2nd U.S. Circuit Court of Appeals, No. 15-1672.

(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)