The US Justice Department has filed a civil suit in federal court alleging that Visa (NYSE:V) is monopolizing debit network markets in violation of the Sherman Act. The DOJ claims that Visa is using its dominance to thwart competition and impede innovations.
The DOJ complaint states that over 60% of debit transactions in the US run on Visa’s debit network. This enables Visa to charge more than $7 billion in fees each year.
The complaint further alleges that Visa illegally “wields its dominance, enormous scale, and centrality to the debit ecosystem to impose a web of exclusionary agreements on merchants and banks.” The DOJ alleges that Visa “locks up debit volumes” and “smothers” competition.
“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick Garland. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.”
The DOJ claims that it is seeking to restore competition to this market on behalf of the American public.
The DOJ notes that it halted Visa from acquiring top Open Banking provider Plaid, a merger that was said to be valued at $5.3 billion.
Shares in Visa lost almost 16% of its value today following the news.
