The Department of Justice (DOJ) has filed an antitrust lawsuit against Visa, alleging that the financial company has a monopoly on the debit network market, charging banks and marketplaces exorbitant fees that are passed on to consumers and preventing rivals such as PayPal and Square from competing on an equal footing.
Bloomberg first reported on Monday that the Justice Department plans to file an antitrust lawsuit against Visa starting in 2020 following a years-long investigation into the company’s business practices. Visa was seeking to acquire fintech startup Plaid for $5.3 billion, but the Justice Department filed suit to block the deal, arguing that the acquisition would eliminate a competitive threat that challenges Visa’s powerful dominance in the debit market.
Visa withdrew its bid a year later to avoid further legal disputes, but the Department of Justice continued to investigate Visa’s business practices.
In its latest lawsuit, the Justice Department alleges that a “web of exclusive agreements” Visa struck with banks and companies helped strengthen the company’s market power and “suffocate” potential competitors. Attorney General Merrick Garland said in a statement that Visa “unlawfully amassed the power to collect fees far in excess of what it could charge in a competitive market.”
“Retailers and banks pass on the costs to customers by either raising prices or reducing quality and service,” the statement said. “As a result, Visa’s unlawful conduct affects not just the price of one thing, but the price of nearly everything.”
In an emailed statement, Visa general counsel Julie Rottenberg told Engadget that the Justice Department’s lawsuit is “meritless” and that the company intends to vigorously defend itself in court.
“Today’s lawsuit ignores the reality that Visa is just one of many competitors in a growing debit card industry, and that new entrants are also successful,” Rottenberg said in an email. “Businesses and consumers choose Visa because of our secure, reliable network, world-class fraud protection and the value we deliver. We are proud of the payments network we’ve built, the innovation we drive and the economic opportunity we enable.”
