The U.S. Justice Department is suing to block Visa’s $5.3 billion acquisition of bank data sharing startup Plaid, citing competition concerns. Visa says blocking the acquisition is “legally flawed and contradicted by the facts”.
The DoJ filed its antitrust complaint in federal court in an effort to stop the takeover, according to a report in Finextra. Within the complaint it states, “Visa seeks to buy Plaid – as its CEO said – as an ‘insurance policy’ to neutralize a ‘threat to our important U.S. debit business. 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 suit went on to say, “Visa is a monopolist in online debit transactions, extracting billions of dollars in fees annually from merchants and consumers. Plaid, a financial technology firm with access to important financial data from over 11,000 US banks, is a threat to this monopoly: it has been developing an innovative new solution that would be a substitute for Visa’s online debit services.”
In response, Visa has issued a statement saying the DoJ’s suit “reflects a lack of understanding of Plaid’s business” and that Plaid is “not a payments company” and not a competitor.
The card giant argues the deal is a good one for both consumers and for competition and plans to vigorously defend the transaction.