The US Department of Justice (DOJ) announced on Tuesday that it has filed a civil antitrust lawsuit against Visa for allegedly violating Sections 1 and 2 of the Sherman Act by maintaining a monopoly over debit network markets. Sections 1 and 2 of the Sherman Act prohibit unreasonable restraints of trade and monopolies.
The DOJ contended that Visa engaged in exclusionary and anti-competitive conduct that led to an unlawful monopolization of the debit payment market and that Visa aimed to circumvent the increased competition that the Durbin Amendment was designed to promote. However, the DOJ contended that Visa’s contractual terms and established dominance in the industry effectively block the use of alternative networks.
The DOJ also stated that Visa’s contractual terms often require merchants to route the majority of their debit transactions through Visa networks instead of other card networks to escape higher fees or contractual termination. Most payments are therefore automatically routed through Visa’s networks, leaving other companies to compete for the small remaining fractions of debit transactions.
During a press conference announcing the civil action, Attorney General Merrick B. Garland stated, “Visa’s unlawful conduct affects not just the price of one thing, but nearly everything.”
This is not the first time the DOJ has filed an antitrust lawsuit against Visa. In 2020, the DOJ filed a lawsuit against the company in an attempt to block a proposed merger between Visa Plaid, a technology company. The DOJ determined the deal to be an effort by Visa to prevent competition to its services as Plaid’s technology provided an alternative, lower-cost option for online debit payments. Former Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division stated then that the acquisition would “deprive American merchants and consumers of this innovative alternative to Visa and increase entry barriers for future innovators”. The potential agreement was abandoned by both companies following the filing of the lawsuit.
Relatedly, on August 5, US District Court Judge Amit P. Mehta held that Google LLC violated section 2 of the Sherman Act by maintaining an illegal monopoly over internet search and search advertising markets. The rule marked a significant victory for the US Department of Justice (DOJ) and State Attorneys General who have been challenging Google’s dominance for several years, with Mehta also concluding that Google engaged in unlawful practices to preserve its monopoly in the online search sector.
