San Francisco sued American Express Co. for allegedly stifling competition with excessive fees, seeking billions of dollars in restitution to merchants.

"The party is over for American Express,"  City Attorney Dennis Herrera said Thursday in a statement.

"American Express for years has exacted a 3 percent fee on each charge card transaction -- well in excess of fees charged such competitors as Visa and MasterCard," and Amex "strictly prohibited its participating merchants from taking any step to encourage consumers' use of less costly payment methods, including cash." according to Herrera.

"We don't believe the suit has merit" and will fight it, Marina Norville, a spokeswoman for AmEx, said Thursday by e- mail.

American Express fell 0.5 percent to $71.80 at 8:23 a.m. in New York. The shares dropped 22 percent this year through Wednesday, the third-worst performance in the Dow Jones Industrial Average.

In a separate legal dispute, the company and merchants fighting rules on credit-card fees told a federal judge in October they were resuming settlement talks. The judge in Brooklyn, New York, threw out an earlier accord after learning that the merchants' lead attorney had shared confidential information with another lawyer.

The new case, filed earlier this month, is People of the State of California v. American Express Co., 15-548854, California Superior Court (San Francisco).

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