By Jody Godoy
(Reuters) – The U.S. Division of Justice sued Visa (NYSE:) for alleged antitrust violations on Tuesday, accusing one of many world’s largest cost networks of suppressing competitors by threatening retailers with excessive charges and paying off potential rivals.
Visa processes greater than 60% of debit transactions within the U.S., bringing it $7 billion every year in charges collected when transactions are routed over its community, the Justice Division mentioned. The corporate protects that dominance via agreements with card issuers, retailers, and opponents, prosecutors allege.
The bid to sort out the charges, generally often called swipe charges or interchange charges, is a part of the Biden administration’s efforts to fight rising shopper costs, a serious concern within the Nov. 5 presidential election between Democrat Kamala Harris and Republican Donald Trump.
“Visa’s illegal conduct impacts not simply the worth of 1 factor, however the worth of practically all the things,” Lawyer Basic Merrick Garland mentioned in an announcement, noting retailers and banks go cost community prices to shoppers.
Visa’s alleged anticompetitive conduct started round 2012, as competing corporations entered the funds area following reforms that required card issuers to accommodate unaffiliated networks, a senior Justice Division official mentioned.
The lawsuit seeks to have a decide in Manhattan impose necessities that may restore competitors for companies to course of debit funds each on-line and at bodily shops.
The Justice Division’s antitrust division started investigating Visa over its debit card practices in 2021, the identical 12 months it blocked Visa’s acquisition of economic know-how firm Plaid. Rival Mastercard (NYSE:) mentioned in April it was being investigated by the Justice Division as nicely.
Each corporations have been in litigation for practically twenty years over their dominance within the playing cards market.
Visa and Mastercard agreed in 2019 to pay U.S. retailers $5.6 billion to settle damages claims in a category motion lawsuit accusing them of anticompetitive practices.
A federal decide in Brooklyn rejected a parallel settlement in June that would scale back swipe charges by an estimated $30 billion over 5 years and require Visa and Mastercard to elevate some guidelines that bar retailers from charging clients to make use of their playing cards.
Visa has put aside round $1.6 billion for potential settlements in different U.S. instances over interchange charges.