The Department of Justice (DOJ) filed an antitrust lawsuit against Visa. The suit alleges that the financial firm has a monopoly over debit network markets, allowing it to charge banks and marketplaces exorbitant fees that are passed on to consumers and prevent rival companies like PayPal and Square from competing at their level.
It was first reported on Monday that the Justice Department was planning to file an antitrust lawsuit against Visa following a multi-year investigation into Visa’s business practices beginning in 2020. Visa sought an acquisition with a $5.3 billion bid, but the Justice Department filed a lawsuit blocking the deal on the grounds that the acquisition would eliminate a competitive threat that challenged Visa’s powerful hold on debit markets.
Visa withdrew the offer a year later to avoid further legal entanglements, but the Justice Department continued to investigate Visa's business practices.
The Justice Department alleges in its latest complaint that Visa’s “web of exclusionary agreements” with banks and corporations helped strengthen its market dominance and “smother” any potential competitors. Attorney General Merrick Garland said in a statement that Visa “unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive marketplace.”
“Merchants and banks pass those costs on to customers, either by raising prices or reducing quality or service,” the statement said. “As a result, Visa’s illegal conduct affects not just the price of one thing, but the price of almost everything.”
Visa General Counsel Julie Rottenberg said Engadget in an emailed statement that the Justice Department's lawsuit is “without merit” and that they plan to vigorously defend themselves in court.
“Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with new entrants thriving,” Rottenberg said via email. “When businesses and consumers choose Visa, it's because of our secure and trusted network, our world-class fraud protection, and the value we deliver. We're proud of the payments network we've built, the innovation we foster, and the economic opportunity we create.”
