United States: The U.S. Department of Justice (DOJ) has filed a major antitrust lawsuit against Visa, accusing the financial giant of competition to maintain a monopoly in the debit card market. The government claimed that Visa used exclusive contracts and other restrictive practices to block rivals and drive up costs for American consumers and businesses.
According to the DOJ, Visa punished companies that tried to use alternative payment networks and paid off potential competitors to maintain its dominance. These tactics, the DOJ alleges, have slowed innovation and contributed to $7 billion in annual fees that Visa collects from merchants and consumers.
Visa, which processes over 60% of U.S. debit card transactions, has pledged to fight the claims. Julie Rottenberg, the company’s general counsel, described the lawsuit as “meritless,” stating that Visa is just one of many players in a growing debt market. Rottenberg said that, “Today’s lawsuit ignores the reality that Visa is just one of many competitors.”
The DOJ began its investigation into Visa in 2021, and this lawsuit is part of a broader antitrust push by the Biden administration, which has been more aggressive in tackling monopoly concerns than previous administrations.
Attorney General Merrick Garland said Visa’s dominance allows it to charge fees far higher than what a truly competitive market would bear. Garland clarified that, “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service.”
The lawsuit, filed in a federal court in New York, claims Visa forced businesses into exclusive deals by requiring them to route a certain volume of transactions through its network or face penalties. The DOJ also said Visa threatened tech firms like PayPal with significant fees unless they agreed to route payments through its system.
Visa’s stock dropped over 5% following the announcement. Experts, however, say this case may pose challenges for the DOJ. George Alan Hay, an antitrust law professor at Cornell Law School, said the lawsuit hinges on how the debit card market is defined and whether Visa’s 60% market share qualifies as a monopoly.
Despite the hurdles, this lawsuit marks the latest move in the government’s effort to rein in big tech and financial industry giants under growing investigation for anti-competitive behaviour worldwide.
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