DOJ files antitrust lawsuit against Visa
Visa accused of monopolistic practices, allegedly stifling competition and raising costs for consumers and merchants.
Key Takeaways
- Visa controls over 60% of U.S. debit transactions, with the DOJ accusing it of using its dominance to stifle competition and raise fees.
- The DOJ accuses Visa of using restrictive agreements to maintain market dominance.
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The US Department of Justice (DOJ) has filed a civil antitrust lawsuit against Visa, alleging that Visa has unlawfully monopolized the debit network market. Visa is accused of using its dominance to suppress competition, inflate fees, and thwart innovation.
“Visa has unlawfully amassed the power to extract fees far beyond what it could charge in a competitive market,” said Attorney General Merrick B. Garland.
According to the DOJ, Visa, which processes over 60% of debit transactions in the US, has engaged in exclusionary practices that prevent smaller competitors and innovative financial technologies from gaining traction in the debit market.
The DOJ’s lawsuit highlights Visa’s stronghold over the debit market, where it charges $7 billion annually in fees for processing transactions. Visa allegedly leverages its scale and central role in the debit ecosystem to impose restrictive agreements on merchants and banks, penalizing those who use competing debit networks and locking out competition.
“Anticompetitive conduct by corporations like Visa leaves the American people and our entire economy worse off,” said Principal Deputy Associate Attorney General Benjamin C. Mizer.
Visa has allegedly maintained its monopoly by targeting both smaller debit networks and potential technology entrants. The DOJ claims Visa discouraged competition by coercing banks and merchants into agreements committing large transaction volumes to Visa.
The lawsuit also points to Visa’s strategy of “cooperating” with would-be competitors, particularly in the tech industry, to prevent them from offering disruptive alternatives. The DOJ claims Visa saw tech companies and fintech startups as an “existential threat” and neutralized them by paying them to partner with Visa instead of competing.
“Visa fears competition and innovation, and instead chooses unlawful cooperation and monopolization,” said Principal Deputy Assistant Attorney General Doha Mekki of the DOJ’s Antitrust Division.
The lawsuit against Visa is the latest in a series of antitrust enforcement actions taken by the DOJ to protect competitive markets. In 2020, the DOJ successfully blocked Visa from acquiring Plaid, a fintech company that was developing innovative debit payment technologies.
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