News of the DOJ’s investigation first broke last month.
“By acquiring Plaid, Visa would eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers,” the DOJ wrote in its lawsuit.
The deal would violate Section 2 of the Sherman Act “and must be stopped,” the DOJ wrote in its filing, published by Bloomberg Law.
In a statement, Visa said it “strongly disagrees” with the DOJ’s “legally flawed” arguments.
“This action reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates,” the statement read. “The combination of Visa and Plaid will deliver substantial benefits for consumers seeking access to a broader range of financial-related services, and Visa intends to defend the transaction vigorously.”
“As we explained to the DOJ, Plaid is not a payments company. Visa’s business faces intense competition from a variety of players – but Plaid is not one of them. Plaid is a data network that enables individuals to connect their financial accounts to the apps and services they use to manage their financial lives, and its capabilities complement Visa’s. Together, Visa and Plaid will deliver better digital experiences and more choice for consumers in managing their money and financial data. Visa is confident that this transaction is good for consumers and good for competition,” the statement added.
As the Justice Department argues, Visa’s monopoly power in online debit is protected by barriers to entry and expansion. New challengers to Visa need connections with millions of consumers to attract merchants and need connections to thousands of merchants to attract new consumers, the DOJ said.
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