By Jonathan Stempel
(Reuters) - Apple was ordered on Wednesday to face a private antitrust lawsuit by payment card issuers accusing the company of thwarting competition for its Apple Pay mobile wallet.
U.S. District Judge Jeffrey White said the plaintiffs could try to prove that Apple violated the federal Sherman antitrust law by enforcing a 100% monopoly over the domestic market for tap-and-pay wallets for iPhones, iPads and Apple Watches.
The Oakland, California-based judge also dismissed a "tying" claim, which accused Apple of requiring purchasers of iOS devices to buy Apple Pay or forego purchases of competing wallets.
Apple, based in Cupertino, California, did not immediately respond to requests for comment.
"We are happy with this ruling," Steve Berman, a lawyer for the plaintiffs, said in an email. "There are billions at stake so getting by the motion (to dismiss) largely intact was huge for the class."
The proposed class action is led by Illinois' Consumers Co-op Credit Union, and Iowa's Affinity Credit Union and GreenState Credit Union.
They said Apple "coerces" people who use its smartphones, tablets and smart watches into using its own wallet for tap-and-pay transactions, unlike makers of Android-based devices that let people choose wallets such as Google (NASDAQ:GOOGL) Pay and Samsung (KS:005930) Pay.
According to the complaint, Apple's conduct forces more than 4,000 banks and credit unions that use Apple Pay to pay at least $1 billion of excess fees, and harms consumers by minimizing the incentive to make Apple Pay safer and easier to use.
White said the plaintiffs plausibly alleged that Apple allow alternatives to Apple Pay, and that more competition would spur innovation and reduce prices.
In seeking a dismissal, Apple said it charged "nominal" fees to even smaller card issuers, and that the plaintiffs ignored the "competitive reality" that consumers could still pay with cash, credit and debit cards, and other means.
European Union antitrust regulators accused Apple in May 2022 of abusing its dominance in iOS devices and mobile wallets. The regulators have since continued their investigation.
The case is Affinity Credit Union et al v Apple Inc (NASDAQ:AAPL), U.S. District Court, Northern District of California, No. 22-04174.