Visa is being sued for operating an illegal monopoly that raises the price of ‘almost everything’

New York
CNN
—

The U.S. Department of Justice filed a lawsuit Tuesday accusing Visa of operating an illegal monopoly in the debit card market.

According to the ministry, Visa has been abusing its dominant position in the payment card market for more than ten years. In doing so, the company forces companies to use Visa’s network instead of that of the competition. The company also wants to prevent new alternatives from entering the market.

“We allege that Visa has unlawfully amassed the power to collect fees that far exceed what it could charge in a competitive market,” Attorney General Merrick Garland said in a statement. “Merchants and banks pass those costs on to consumers, either by raising prices or by reducing 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 asks Visa for comment on the lawsuit.

The antitrust case is one of several significant actions the Justice Department has taken recently. The department also recently filed civil lawsuits against a real estate company that allegedly helped artificially inflate rents across the country and another against Ticketmaster’s parent company Live Nation, and convinced a judge to declare that Google violated antitrust laws with its search business.

It also comes just three years after the Justice Department filed a lawsuit to block Visa from merging with financial technology startup Plaid. The $5.3 billion merger agreement was scrapped and the lawsuit was dropped.

According to the new complaint against Visa, filed in federal court in New York, more than 60% of debit transactions in the country occur on Visa’s debit network. Visa, in turn, could charge more than $7 billion in processing fees on those transactions, the department said.

To maintain that control, Visa imposes exclusivity agreements. These agreements penalize suppliers and banks that want to run transactions through different systems. In this way, Visa effectively isolates the company from the competition.

“Visa also coerces potential competitors into becoming partners rather than entering the market as competitors by offering generous financial incentives and threatening punishing additional fees,” the Justice Department said in a press release. “As the complaint alleges, Visa co-opted competitors because it feared losing market share and revenue or being replaced entirely by another debit network.”

Merchants and retailers have long complained about credit card companies like Visa charging exorbitant fees. A group of merchants agreed to a $30 billion settlement with Visa and Mastercard in March after a decades-long antitrust battle in court.

However, the National Retail Foundation, a trade group representing retailers, opposed the settlement, saying it offered insufficient compensation to stores that used Visa and Mastercard payment terminals. In June, a federal judge rejected the settlement, saying the credit card companies needed to make more concessions to resolve the dispute.