On Tuesday, the U.S. Department of Justice announced the prosecution of Visa, citing its “anticompetitive practices in the United States,” according to a report by Agence France-Presse.
In the complaint filed in New York, U.S. authorities accuse Visa of abusing its dominant position to impose exclusive agreements on banks and merchants.
In a statement, Attorney General Merrick Garland emphasized, “We assert that Visa has unlawfully acquired the power to impose fees that far exceed what the company could command in a competitive market.”
The Department of Justice alleges that Visa enforces exclusionary agreements on merchants and banks, penalizing customers who direct their transactions through different networks or alternative payment systems. Furthermore, Visa reportedly sought to neutralize potential threats from technology firms and fintech startups by entering into partnership agreements, rather than allowing direct competition.
Visa also imposes transaction volume commitments, penalizing merchants and banks for utilizing competitors, even when those competitors offer lower rates.
In response, Visa, which controls over 60% of debit card transactions in the United States and generates approximately $7 billion in annual fees, has denied these allegations. Julie Rothenberg, Visa’s legal counsel, described the claims as “baseless” and asserted that Visa is “just one of many competitors in the rapidly growing debit card sector.” She emphasized that Visa’s success is attributed to its “secure and reliable network.”
Increased Antitrust Scrutiny
Visa’s shares fell by over 5% following the announcement of the lawsuit. This case marks the latest development in a series of antitrust actions taken by the Biden administration, which has adopted a more stringent approach to antitrust concerns compared to previous administrations.
Visa has faced lawsuits and regulatory scrutiny regarding its practices in other regions, including Europe and Australia. Legal experts view this case as a significant challenge for the government, particularly regarding whether Visa’s 60% market share constitutes a monopoly.
George Alan Hay, a law professor at Cornell University and an antitrust law expert, stated in an interview with BBC, “Visa anticipated these lawsuits and organized its fees accordingly.” He added, “It’s not as if this caught them by surprise.”
