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Court decision to open up credit-card competition

WASHINGTON -- MasterCard International Inc. and Visa USA Inc. no longer can block banks from issuing credit cards from competitors after the Supreme Court declined to hear their appeal yesterday.

Banks that issued MasterCard and Visa credit cards had been barred from also offering credit cards from other companies, such as Discover Financial Services Inc. and American Express Co.

As a result, Discover -- a business unit of Morgan Stanley -- filed an antitrust suit yesterday against MasterCard and Visa in US District Court in New York, seeking unspecified damages for its alleged anticompetitive behavior in keeping Discover out of the lucrative bank card market.

American Express chairman and chief executive Ken Chenault said in an interview with the Associated Press legal action would likewise be ''a very viable, very attractive option," but would not say when the company might make a decision.

In the Supreme Court case, the Bush administration argued in court filings that removing the restriction would encourage competition and lead to more choices and, possibly, lower interest rates for consumers.

The administration had won in district court and the New York-based 2nd US Circuit Court of Appeals, which found the restriction was anticompetitive.

About 20,000 banks issue cards only through Visa and MasterCard.

American Express has been trying to persuade banks to issue its cards. Under the contested rules, banks would have to give up Visa and MasterCard cards to do that, and no US bank has agreed, the court was told.

In other business, the court turned away a challenge yesterday to the federal do-not-call registry, ending telemarketers' bid to invoke free-speech arguments to get the popular ban on unwanted phone solicitations thrown out.

The court, without comment, let stand a 10th US Circuit Court of Appeals decision that upheld the registry of more than 64 million phone numbers as a reasonable government attempt to safeguard personal privacy and reduce telemarketing abuse.

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