As reported by Engadget, the Department of Justice (DOJ) has taken legal action against Visa, filing an antitrust lawsuit that alleges the financial firm is monopolizing the debit network markets. According to the lawsuit, Visa's alleged monopoly allows it to impose excessive fees on banks and markets, which are then passed on to consumers, while also preventing rival companies like PayPal and Square from competing effectively.
The initial report of the DOJ's intentions to file an antitrust suit against Visa came from Bloomberg on September 23rd. This move follows a lengthy investigation into Visa's business practices that began in 2020. The investigation was prompted by Visa's attempted acquisition of the fintech startup Plaid with a $5.3 billion bid. The DOJ intervened by filing a lawsuit to block the acquisition, arguing that it would eliminate a competitive threat to Visa's dominant position in the debit markets.
Although Visa ultimately withdrew its bid to avoid further legal complications, the DOJ continued its investigation into the company's business practices. The latest lawsuit alleges that Visa's "web of exclusionary agreements" with banks and businesses has further solidified its market dominance, effectively stifling potential competitors. Attorney General Merrick Garland emphasized in a statement that Visa has unlawfully accumulated the power to impose fees well above what would be feasible in a competitive market.
Garland's statement highlighted the ripple effect of Visa's alleged misconduct, asserting that the unlawful fees impact not just the cost of a single item, but the price of nearly everything. Visa's General Counsel, Julie Rottenberg, responded to the lawsuit by stating that it is "meritless" and expressing Visa's determination to vigorously defend itself in court.
Rottenberg further contended that Visa operates in a growing debit space with numerous thriving competitors, emphasizing the company's secure and reliable network, world-class fraud protection, and the value it provides to businesses and consumers. She concluded by expressing pride in the payments network Visa has built, the innovation it promotes, and the economic opportunities it facilitates.
"Today's lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving," Rottenberg said by email. "When businesses and consumers choose Visa, it is because of our secure and reliable network, world-class fraud protection, and the value we provide. We are proud of the payments network we have built, the innovation we advance, and the economic opportunity we enable."
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