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PayPal Wins Dismissal of Antitrust Lawsuit Over Merchant Rules

By  |  November 9, 2025

PayPal Holdings Inc. has successfully fended off a federal antitrust lawsuit that alleged the company’s merchant agreements unlawfully restricted competition. A U.S. District Court judge in California dismissed the case, ruling that the plaintiffs failed to prove PayPal possessed the level of market dominance required to sustain their claims, according to Bloomberg.

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    In his order issued Wednesday, Judge Jeffrey S. White of the U.S. District Court for the Northern District of California granted PayPal’s motion to dismiss, stating that the plaintiffs did not demonstrate that the payment platform had “market power,” which he defined as the ability to raise prices above competitive levels. The lawsuit had accused PayPal of enforcing “anti-steering” provisions that stopped merchants from encouraging customers to use lower-cost payment methods.

    The plaintiffs claimed that PayPal’s “Anti-Steering Rules” effectively locked merchants into accepting higher fees, limiting their ability to direct consumers toward cheaper alternatives. They argued that the company’s influence over digital transactions, including through its subsidiary Venmo, created an unfair advantage in the market. However, per Bloomberg, the court found these arguments insufficient to establish that PayPal controlled a dominant share of the online payment processing market.

    Related: PayPal Partners With OpenAI to Bring Payments Directly Into ChatGPT

    The complaint also asserted that PayPal charged the highest transaction fees among major payment processors. This case marked the first time the company faced accusations under U.S. competition law over its anti-steering practices, according to Bloomberg. Steve Berman, one of the attorneys representing the plaintiffs, emphasized the groundbreaking nature of the suit.

    PayPal, for its part, has maintained that its rules are designed to ensure fairness and consistency in pricing across merchants, a stance that the court appeared to accept in part. The dismissal represents a significant legal victory for the payments giant, though it remains unclear whether the plaintiffs will seek to amend their complaint or appeal the ruling.

    Source: Bloomberg