Federal Lawsuit: Visa's 'Unlawful Conduct' Keeps Prices High

The Justice Department is taking action against the company that processes more than 60% of debit card transactions in the US. In an antitrust lawsuit filed in federal court in Manhattan on Tuesday, the department accused Visa of illegally monopolizing the market by blocking competition, keeping fees artificially high, CNN reports. Antitrust enforcers say Visa penalized merchants and banks that used rival networks.

• Visa's conduct affects "the price of nearly everything." "We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market," Attorney General Merrick B. Garland said in a statement, per the AP. "Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa's unlawful conduct affects not just the price of one thing—but the price of nearly everything."

• A carrot-and-stick approach to rivals. Visa "induces would-be competitors to become partners instead of entering the market as competitors by offering generous monetary incentives and threatening punitive additional fees," the Justice Department said. "As the complaint alleges, Visa coopted the competition because it feared losing share, revenues, or being displaced by another debit network altogether."
• Move is welcomed by merchants. NPR reports that retailers welcomed the lawsuit. Merchants have long complained about excessive fees charged by Visa and other processors. "You can mandate competition," says Stephanie Martz, general counsel for the National Retail Federation. "But if what's happening behind the point-of-sale is inhibiting that, then you don't actually have competition."

• Lawsuit follows long investigation. The lawsuit was filed after a probe of Visa's business practices that began in 2021, the year the company attempted to acquire financial-technology infrastructure firm Plaid, Bloomberg reports. According to the lawsuit, Visa saw the acquisition as an "insurance policy" that would remove a potential rival. The deal was abandoned two months after the Justice Department sued to block it, the New York Times reports.
• Visa's response. Visa said it considers the lawsuit "meritless," NPR reports. "Anyone who has bought something online, or checked out at a store, knows there is an ever-expanding universe of companies offering new ways to pay for goods and services," Julia Rottenberg, Visa's general counsel, said in a statement.

(More Visa stories.)