DOJ Suit Against Visa Faces High Hurdles, Says ITIF

WASHINGTON—Following the lawsuit by the U.S. Department of Justice (DOJ) against Visa for alleged anticompetitive behavior in two debit network services markets, the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, released the following statement from Joseph V. Coniglio, director of antitrust and innovation, leading ITIF’s Schumpeter Project on Competition Policy:

The payments industry is no stranger to antitrust scrutiny. All the way back to its case against the so-called “exclusionary rules” which prevented member banks from issuing Amex or Discover cards to the proposed merger with Plaid, Visa has long been a favorite target of the DOJ.

Consumers know that, contrary to the DOJ’s claims, Visa does not have monopoly power and competes vigorously with Mastercard and others for debit network services. It is thus unsurprising that the market shares the DOJ alleges are 60 and 65 percent are below the 70 percent threshold courts in the Second Circuit typically apply.

The DOJ’s attempt to get around this by bringing an attempted monopolization claim, which only requires a dangerous probability of monopoly power, is again not only belied by Mastercard’s longstanding competitive position, but vitiated by the difficulty of showing that Visa acted with any anticompetitive animus.

Moreover, the DOJ’s alleged anticompetitive “web of contracts” with merchants, acquirers, and issuers ultimately appear to be nearly all reducible to a series of volume discounts. And yet, given the high margins and low incremental costs that the DOJ itself notes, it is almost impossible to imagine that Visa is systematically pricing below its costs.

Finally, the DOJ attempts to characterize a series of partnership agreements between Visa and digital wallets like Apple, Paypal, and Square into a collusive scheme to stifle competition, but for which Visa should be able to present strong pro-consumer justifications.

With this lawsuit, the DOJ continues its crusade against corporate America at a time when U.S. competitiveness against China could not be more paramount, including in global payments. For all its talk about moving antitrust beyond the consumer welfare standard to take into account broader political concerns, this sense of the national interest never seems to factor into the neo-Brandeisian agenda.

Contact: Sydney Mack, [email protected]