Attorney General Merrick B. Garland Delivers Remarks on the Justice Department's Lawsuit Against Visa for Monopolizing Debit Markets

Remarks as Delivered

Good afternoon.

Earlier today, the Department of Justice sued Visa for violating Sections 1 and 2 of the Sherman Antitrust Act.

We allege Visa is a monopolist in the debit transaction markets that is violating federal antitrust law and inflicting often hidden, but significant, harm on American consumers and businesses.

Visa operates the largest debit network in the United States.

A debit network facilitates the electronic transfer of funds directly from a consumer's bank account to the merchant's bank account in a retail transaction. Millions of Americans prefer to use debit transactions, which are often the primary option for lower income consumers without a credit card.

In the United States, over $4 trillion of debit card transactions take place every year. Over 60% of those transactions, and over 70% of all online debit transactions, are routed through Visa's electronic payment network.

According to Visa's own calculations, it is insulated from competition for 75 to 80% of debit transactions initiated with a Visa branded debit card.

We allege that, to maintain this monopoly power, Visa deploys a web of unlawful, anticompetitive agreements to penalize merchants and banks for using competing payment networks.

At the same time, it coerces would-be market entrants into unlawful agreements not to compete by threatening high fees if they do not cooperate and promising big payoffs if they do.

The result is a debit market where Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market.

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.

When a bank issues a debit card, it chooses which electronic payment networks will be authorized to process the card's transactions.

When a debit card holder uses that card to buy something from a merchant, the merchant - or, for a smaller merchant, its bank - must choose which of the issuer's accepted networks it will use to process the transaction.

We allege that Visa has virtually eliminated that choice.

It has done so, not by offering the most competitive rates or the most innovative product, but by unlawfully structuring its contracts to disincentivize merchants and banks from doing business using competitor electronic payment networks.

Visa knows it is a "must carry" network for banks and merchants alike. That means all merchants and banks must contract with Visa because certain purchases using a Visa debit card can only be completed through its network.

Visa uses that leverage to get banks and merchants to agree to what are known as "volume requirements." These provisions require banks and merchants to direct a large amount of their transactions to Visa or else face higher fees.

As a result, when merchants weigh the decision of which electronic payment network to use for a given transaction, they cannot choose the authorized network with the lowest price or best offering for that transaction. Instead, they operate under the threat that, if they do not process enough of their payments through Visa, they will face exorbitant fees on all Visa debit transactions.

Today, Visa collects more than $7 billion each year in network fees on U.S. debit transactions, with a significant part of that sum resulting from Visa's illegal conduct.

In addition to entering into anticompetitive contracts for use of its network, we allege that Visa unlawfully uses its monopoly power to discourage potential rivals - particularly technology companies - from competing in the debit transaction market. In a Visa executive's own words, it views potential entrants with deep merchant consumer networks as an "existential threat" to its debit business.

As outlined in our complaint, Visa has expressed fear that its self-described "frenemies" in Big Tech would launch technology that competes with Visa by enabling payment directly from consumers' bank accounts.

For example, in the case of Square, the company that operates the digital wallet known as CashApp, Visa has entered into a series of contracts that discourage Square from competing aggressively against Visa. Or as a Visa executive stated, "we've got Square on a short leash."

Entering into contracts with would-be competitors to prevent them from becoming actual competitors is an unlawful agreement not to compete that violates Section 1 of the Sherman Antitrust Act. And leveraging monopoly power to limit competitors' ability to gain market share violates Section 2 of that Act.

I am grateful to the Department's Antitrust Division for their excellent work on this case over the past three years.

That includes the leaders of the Division who are standing behind me, as well as the dedicated career attorneys and staff who work tirelessly to protect consumers and ensure competitive markets.

Today's lawsuit against Visa is only the latest example of the Justice Department's work to enforce the antitrust laws and hold accountable companies that undermine competition and harm the American people.

In some of the Justice Department's antitrust enforcement actions, the harm caused by the alleged illegal conduct is more visible - higher prices for air travel, for concert tickets, for smartphones.

The harmful effects of Visa's alleged anticompetitive conduct are less visible. But they are no less harmful.

While "Visa" is the first name many debit card users see when they take out their card to make a purchase, they do not see the role that Visa plays behind the scenes. There, it controls a complex network of merchants, financial institutions, and consumers.

What the Justice Department sees - and what we allege in this lawsuit - is that Visa is a monopolist that is distorting the marketplace for debit transactions.

It is unlawfully blocking competition. It is depriving American banks, merchants, and consumers of lower costs and product innovation. It is charging a hidden toll on each of trillions of transactions, adding up to billions of dollars of fees imposed annually on American consumers and businesses.

I'm now going to turn the podium over to Principal Deputy Associate Attorney General Ben Mizer. Thank you all.

Public link

Please use the above public link if you want to share this noodl on another website.