Visa is sued for illegal monopoly that increases the price of “almost everything”

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CNN
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The US Department of Justice filed a lawsuit on Tuesday accusing Visa of illegally monopolizing the debit card market.

The department alleges that Visa abused its dominant position in the debit card market for more than a decade to force companies to use Visa's network instead of that of competitors and to prevent new alternatives from entering the market.

“We allege that Visa has unlawfully amassed the power to charge fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement. “Merchants and banks pass these costs on to consumers, either by raising prices or by degrading quality or service. As a result, Visa's unlawful conduct affects not just the price of one thing — but the price of almost everything.”

CNN has asked Visa for comment on the lawsuit.

The antitrust suit is one of several major actions the Justice Department has taken recently. The department also recently filed civil suits against a real estate company that it said helped artificially inflate rents across the country, as well as another against Ticketmaster parent company Live Nation, and was able to convince a judge to find that Google violated antitrust laws with its search business.

Moreover, this happened just three years after the Justice Department filed suit to block Visa's merger with financial technology startup Plaid. The $5.3 billion merger deal was thrown out and the lawsuit dropped.

According to the new lawsuit against Visa, filed in federal court in New York, more than 60 percent of debit transactions in the country are processed through Visa's debit network. Visa, in turn, can charge more than $7 billion in processing fees for those transactions, the department said.

To maintain this control, Visa imposes exclusivity agreements that penalize vendors and banks that want to process transactions through other systems, effectively isolating the company from the competition.

“Visa also induces potential competitors to become partners rather than enter the market as competitors by offering generous financial incentives and threatening punitive fees,” the Justice Department said in a press release. “As the complaint alleges, Visa co-opted the competition because it feared losing market share or revenue or being displaced by another debit network.”

Merchants and retailers have long complained about what they call exorbitant fees charged by credit card companies like Visa. In March, a group of merchants agreed to a $30 billion settlement with Visa and Mastercard after a decades-long antitrust battle in court.

But the National Retail Foundation, a trade group that represents retailers, fought the settlement, arguing it offered too little compensation to stores that use Visa and Mastercard payment terminals. In June, a federal judge rejected the settlement, saying the credit card companies would have to make more concessions to resolve the dispute.