By Jonathan Stempel
NEW YORK (Reuters) - The U.S. government on Thursday asked a federal appeals court to reconsider a recent antitrust decision allowing American Express Co <AXP.N> to stop merchants from encouraging customers to use rival cards that charge lower fees.
In its Sept. 26 decision, the 2nd U.S. Circuit Court of Appeals in New York reversed a lower court ruling that had struck down AmEx's "anti-steering" rules.
At issue are the more than $50 billion of fees that merchants pay annually to process transactions.
These fees are largely hidden from customers, but can be passed along to them through higher prices.
The appeals court said AmEx can block merchants that accept its cards from steering customers to cheaper cards from Visa Inc <V.N> and MasterCard Inc <MA.N>, even if the move saved them money.
But in Thursday's filing, the U.S. Department of Justice said the court erred by focusing on how AmEx's policy affected customers and merchants, rather than merchants alone.
The department also said it should not have had to show at the outset that the policy did more harm than good, and that instead AmEx must show how its policy promotes competition.
"It is not for AmEx to decide on behalf of the entire market to eliminate merchant-side price competition, forcing all retail customers to subsidize rewards for AmEx's affluent cardholders," the Justice Department said.
AmEx spokesman Andrew Johnson in a statement said the government's claims lack merit, and that "if asked to do so by the court, we will oppose the DOJ's petition vigorously."
The New York-based company accounted for about 26.4 percent of U.S. credit and charge card purchase volume in 2013.
Visa and MasterCard settled similar lawsuits in 2011 by agreeing to change their rules.
Thursday's filing seeks reconsideration of the Sept. 26 decision by the original three-judge appeals court panel, or by the court's 11 active judges in an "en banc" review.
The 2nd Circuit rarely grants such requests, and holds en banc hearings at a rate of roughly one every other year.
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)