The US Justice Department has taken legal action against Visa, accusing the company of engaging in illegal monopolistic practices within the debit card market. The lawsuit, filed on Tuesday, alleges that Visa has abused its dominant position in the market for over a decade. The department claims that Visa has used its influence to compel businesses to utilize its network over competitors' networks and to impede the entry of new alternatives into the market.
Attorney General Merrick Garland stated that Visa's actions have allowed the company to extract fees that surpass what would be possible in a competitive market. These excessive fees are ultimately passed on to consumers through increased prices or reduced quality of service, impacting a wide range of goods and services.
The lawsuit is part of a series of recent antitrust actions taken by the Justice Department. Other notable cases include suits against a real estate company accused of inflating rents and Ticketmaster's parent company, Live Nation. Additionally, the department successfully challenged Google's search business practices for violating antitrust laws.
The current complaint against Visa highlights that over 60% of debit transactions in the US occur on Visa's network, allowing the company to generate over $7 billion in processing fees. Visa allegedly enforces exclusivity agreements that penalize entities seeking to use alternative transaction systems, effectively stifling competition.
Visa is accused of enticing potential competitors to collaborate rather than enter the market independently by offering financial incentives and threatening punitive fees. The Justice Department asserts that Visa's actions aim to maintain its market dominance and prevent the emergence of new debit networks.
Merchants have long criticized credit card companies like Visa for imposing high fees. In a recent development, a group of merchants reached a $30 billion settlement with Visa and Mastercard after a prolonged antitrust dispute. However, the National Retail Foundation opposed the settlement, arguing that it provided inadequate compensation to retailers using Visa and Mastercard payment terminals. A federal judge subsequently rejected the settlement, calling for further concessions from the credit card companies to resolve the matter.
