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US government sues Visa for antitrust violations

manhattantribune.com by manhattantribune.com
25 September 2024
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US government sues Visa for antitrust violations
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The U.S. Justice Department announced Tuesday that it is filing charges against payment card issuer Visa for anticompetitive practices in the United States.

In the complaint filed in a New York court, U.S. authorities accuse Visa of abusing its dominant position to impose exclusivity agreements on banks and merchants and of “maintaining its monopoly” by entering into non-compete agreements with potential rivals.

These practices created “a market in which Visa has unlawfully acquired the power to charge fees that far exceed what it could obtain in a competitive market,” Attorney General Merrick Garland said at a news conference.

“Merchants and banks pass these costs on to consumers, either by raising prices or reducing quality or service. Therefore, Visa’s illegal behavior affects not just the price of one thing, but the price of virtually everything,” he added.

The San Francisco-based company controls more than 60 percent of debit card transactions in the United States, from which it charges fees of more than $7 billion a year, according to the Justice Department.

“Visa has struck a series of deals with major merchants, debit card banks and other key players in the industry,” said a senior official in the Justice Ministry’s antitrust section, Doha Mekki.

“These deals have presented merchants who might consider doing business with a cheaper competitor with a false choice: choose Visa or face ruinous fees on every Visa transaction,” she said.

“Many Americans rely entirely on debit cards, particularly younger or less affluent Americans who cannot obtain credit cards or prefer not to use them,” said the department’s number 3, Benjamin Mizer.

The poorest Americans are therefore the most affected by the imposition of these “exorbitant” fees, he said.

The company responded in a statement from its legal counsel, Julie Rottenberg. “These lawsuits are without merit and we will defend ourselves vigorously,” she said.

“When businesses and consumers choose Visa, it’s for our secure and reliable network, our unmatched fraud protection worldwide and the quality of our service,” she assured.

In 2021, Visa announced that it was the target of an investigation by the Department of Justice into its practices in the United States concerning debit cards, in a document sent to the American stock market regulator, the Securities and Exchange Commission (SEC).

Tags: antitrustgovernmentsuesviolationsvisa
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