American Express Company (NYSE:AXP) violated U.S. antitrust law by preventing merchants from encouraging customers to use other forms of payment, including lower-cost credit cards, a federal judge ruled Thursday. The ruling is the second major setback this month for the company after it lost a 16-year partnership with warehouse retailer Costco Wholesale Corp. on Feb. 12.

The American Express Company "imposed actual, concrete harms on competition in the credit and charge card network services market," U.S. District Judge Nicholas Garaufis said in his 150-page ruling Thursday.

American Express issued a statement following the ruling, saying the company is "disappointed" with the decision and believes the court’s ruling will harm competition to the detriment of consumers and merchants by further establishing the two dominant payment networks: rivals Visa Inc. and Mastercard Inc. 

Only a small percentage of Visa and MasterCard holders carry American Express cards. By contrast, most American Express Card Members carry a competing card in their wallet. Today’s decision means merchants would be able to steer customers to use Visa and Mastercard, while it would be virtually impossible to steer away from them.

American Express said it intends to appeal the court’s ruling “at the appropriate time,” the company said in statement Thursday.

The Justice Department filed the lawsuit against American Express in 2010, arguing the company's merchant rules hinder competition and increase fees for consumers. “By recognizing that American Express’s rules harm competition, the court vindicates the promise of robust marketplaces that is enshrined in our antitrust laws,” U.S. Attorney General Eric Holder said Thursday.

The ruling comes after warehouse retailer Costco Wholesale Corp. announced last week it will stop accepting American Express credit cards at U.S. stores next year. The move would negatively impact American Express’ earnings over the next two years, cutting around 8 percent of global annual spending on its cards.

Separately, American Express announced last month it plans to cut more than 4,000 jobs, or 6 percent of its global workforce, in 2015 to counter higher expenses and loan loss provisions. The company made the announcement after posting quarterly earnings Jan. 22 that beat Wall Street estimates. American Express reported fourth-quarter earnings per share of $1.39 per share on revenue of $9.1 billion, compared with EPS of $1.21 on sales of $8.5 billion a year ago. 

Following the court ruling, shares of American Express Co. fell 1.73 percent Thursday to close at $78.40. Meanwhile, rival Mastercard Inc.’s stock price rose 1.68 percent to end at $89.20 and shares of Visa Inc. closed flat, down just 0.01 percent to finish at $269.10.