The US DOJ (Department of Justice) has filed a lawsuit against Visa, accusing the payment giant of violating antitrust laws by suppressing competition through high fees and paying off potential rivals. This lawsuit is part of the Biden administration’s efforts to combat rising consumer prices.
- Visa’s Dominance: The DOJ claims that Visa controls over 60% of U.S. debit transactions, collecting $7 billion annually in fees. It allegedly protects this dominance through agreements with card issuers, merchants, and competitors.
- Anticompetitive Actions: The DOJ alleges that Visa entered into agreements with major companies like Apple, PayPal, and Block Inc. (Square) to prevent them from releasing products that could challenge Visa’s market dominance. Visa also allegedly imposes harsh financial penalties on merchants who don’t route transactions through its network.
- Swipe Fees: The case tackles interchange fees, also known as swipe fees, which Visa charges for processing debit transactions. According to Attorney General Merrick Garland, these fees are often passed down to consumers, affecting the cost of nearly everything.
- Legal Remedies: Prosecutors are seeking a court order to prevent Visa from discouraging competition through its pricing structures and payments to rivals, intending to restore competition in processing debit transactions.
This lawsuit comes as the Biden administration focuses on consumer protection ahead of the November 5 presidential election. It also follows a long history of legal battles over Visa’s dominance, including a $5.6 billion settlement in 2019 and a blocked acquisition of Plaid in 2021.
Visa has set aside $1.6 billion for potential settlements related to other U.S. cases on interchange fees. The case marks a significant move by regulators to tackle the company’s antitrust practices.
