It has been reported that the Justice Department has filed an antitrust lawsuit against Visa in an attempt to block the proposed $5.3 billion acquisition of Plaid.
Plaid builds technical infrastructure APIs that connect consumers, traditional financial institutions, and developers as well as adding key insights to the data access it provide with its suite of analytics products.
The department brought the case, alleging the deal would eliminate the nascent but significant competitive threat that Plaid poses to Visa in the online debit market.
The acquisition would allow Visa to unlawfully maintain a monopoly in online debit, leading to higher prices, less innovation and higher entry costs.
“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 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.
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