Justice Department Sues to Block Visa’s Proposed Acquisition of Plaid

Acquisition Would Eliminate Nascent Competitor Plaid and Prevent Disruption of Visa’s Monopoly in Online Debit

Today, the Department of Justice filed a civil antitrust lawsuit to stop Visa Inc.’s $5.3 billion acquisition of Plaid Inc. Visa is a monopolist in online debit services, charging consumers and merchants billions of dollars in fees each year to process online payments.  Plaid, a successful fintech firm, is developing a payments platform that would challenge Visa’s monopoly. 

“American consumers and business owners increasingly buy and sell goods and services online, and Visa – a monopolist in online debit services – has extracted billions of dollars from those transactions,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “Now, Visa is attempting to acquire Plaid, a nascent competitor developing a disruptive, lower-cost option for online debit payments.  If allowed to proceed, the acquisition would deprive American merchants and consumers of this innovative alternative to Visa and increase entry barriers for future innovators.” 

According to the complaint, Plaid powers some of the most innovative fintech apps.  Plaid’s technology allows developers to plug into consumers’ various financial accounts, with consumer permission, to aggregate spending data, look up balances, and verify other personal financial data.  Plaid connects to 200 million consumer bank accounts and 11,000 U.S. banks.  Because it accesses data on behalf of so many fintech app customers, Plaid has become the leading financial data aggregation company in the United States.  Plaid is planning to leverage its connections to build a bank-linked payments network that would compete with Visa.  Plaid’s money movement platform would allow consumers to pay merchants directly from their bank accounts using bank credentials rather than a debit card.  Plaid’s established connections and technology uniquely positions it to enter the payments market and disrupt Visa’s monopoly. 

The complaint alleges that Visa’s CEO viewed the acquisition as an “insurance policy” to protect against a “threat to our important US debit business.”  This acquisition is the second-largest in Visa’s history, with an extraordinary price tag of $5.3 billion.  Visa’s CEO justified the deal to Visa’s Board of Directors as a “strategic, not financial” move, and noted that in part because “our US debit business i[s] critical and we must always do what it takes to protect this business.”  Unless acquired, Visa feared that Plaid “on their own or owned by a competitor [was] going to create some threat” with a “potential downside risk of $300-500M in our US debit business” by 2024.  If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering.”

Millions of American consumers and merchants depend on debit services to transact business online.  The complaint alleges that Visa has dominated online debit for years and has protected its monopoly with exclusionary tactics that have prevented rivals, including Mastercard, from expanding or entering. The lawsuit alleges that Visa’s proposed acquisition of Plaid is a violation of both Section 2 of the Sherman Act and Section 7 of the Clayton Act.  The Department filed its lawsuit in the U.S. District Court for the Northern District of California.

Visa Inc. is a Delaware corporation headquartered in Foster City, California.  Visa is a global payments company that operates the largest debit network in the United States.  Visa’s 2019 revenues were approximately $23 billion. 

Plaid Inc. is a Delaware corporation headquartered in San Francisco, California.  Plaid is a financial services company that operates the leading financial data aggregation platform in the United States.  In 2019, Plaid earned approximately $100 million in revenues. 

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    In reaction to falling domestic oil prices due to the COVID-19 pandemic, the Bureau of Land Management (BLM) developed a temporary policy in spring 2020 for oil and gas royalty relief. The policy aimed to prevent oil and gas wells from being shut down in way that could lead to permanent losses of recoverable oil and gas. During March through June 2020, BLM gave companies the opportunity to apply for a reduction in the royalty rates for certain oil and gas leases on federal lands. BLM approved reductions from 12.5 percent of total revenue on oil and gas sold from those leases to an average of less than 1 percent for a period of 60 days. However, BLM did not establish in advance that royalty relief was needed to keep applicants' wells operating, according to BLM officials. BLM also did not assess the extent to which the temporary policy kept oil and gas companies from shutting down their wells or the amount of royalty revenues forgone by the federal government. By evaluating the extent to which the policy met BLM's objective of preventing unrecoverable loss of oil and gas resources–and likely costs, such as forgone revenues—BLM could better inform its decisions about granting royalty relief that provides a fair return to the government, should the agency decide to consider such relief in the future. BLM officials told GAO that BLM state offices implementing the temporary policy for royalty relief made inconsistent decisions about approving applications for relief because the temporary policy did not supply sufficient detail to facilitate uniform decision-making. The officials added that their state offices did not have recent experience in processing applications for oil and gas royalty relief. Several of the officials had never received or processed royalty relief applications. In addition, GAO found that ongoing guidance for processing royalty relief decisions—within BLM's Fees, Rentals and Royalties Handbook , last revised in 1995—also does not contain sufficient instructions for approving royalty relief. For example, the handbook does not address whether to approve applications in cases where the lease would continue to be uneconomic, even after royalty relief. As a result, some companies that applied for royalty relief were treated differently, depending on how BLM officials in their state interpreted the policy and guidance. In particular, officials from two state offices told GAO they denied royalty relief to applicants because the applicants could not prove that royalty relief would enable their leases to operate profitably. However, two other state offices approved royalty relief in such cases. The fifth state office denied both of the applications it received for other reasons. BLM's existing royalty relief guidance did not address this issue, and BLM's temporary policy did not supply sufficient detail to facilitate uniform decision-making in these situations. BLM's directives manual states that BLM should provide BLM employees with authoritative instructions and information to implement BLM programs and support activities. Until BLM updates the royalty relief guidance, BLM cannot ensure that future relief decisions will be made efficiently and equitably across the states and provide a fair return to the federal government. BLM manages the federal government's onshore oil and gas program with the goals of facilitating safe and responsible energy development while providing a fair return for the American taxpayer. In April 2020, oil and gas producers faced financial challenges from a drop in demand for oil during the COVID-19 pandemic. If oil and gas prices decline, it places financial stress on oil and gas companies, thereby increasing bankruptcies and the risk of wells being shut down. BLM developed a temporary policy to provide oil and gas companies relief from royalties that they owe to the federal government when they sell oil and gas produced on federal lands. This testimony discusses (1) BLM's development of the temporary policy for royalty relief and what is known about the policy's effects, and (2) BLM's implementation of this policy across relevant states. To do this work, GAO reviewed BLM documents; analyzed royalty data; and interviewed BLM officials from headquarters and the five BLM state offices with jurisdiction over states that account for 94 percent of royalties from oil and gas production on federal lands. GAO is making two recommendations. BLM should (1) evaluate the effects of its temporary royalty relief policy and use the results to inform its ongoing royalty relief program, and (2) update its guidance to provide consistent policies for royalty relief.  For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.
    [Read More…]
  • New Jersey Man Sentenced to Prison for Tax Fraud Conspiracy
    In Crime News
    A New Jersey man was sentenced to 78 months in prison today for conspiring to defraud the United States, filing false claims, and obstructing the internal revenue laws, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
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  • Office of the Historian, Foreign Service Institute Release of Foreign Relations of the United States, 1977–1980, Volume XI, Part 1, Iran: Hostage Crisis, November 1979–September 1980
    In Crime Control and Security News
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    In Space
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  • Alabama Doctor Sentenced for Conspiracy to Distribute a Controlled Substance
    In Crime News
    An Alabama doctor and her husband were sentenced Tuesday to 52 and 30 months in prison respectively for prescribing and dispensing controlled substances without a legitimate medical purpose and outside the course of professional practice.
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    In Travel
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  • Departments of Justice and Homeland Security Release Data on Incarcerated Aliens
    In Crime News
    Today, the Department of Justice and the Department of Homeland Security released the Alien Incarceration Report for Fiscal Year 2019.  The data shows that 94 percent of confirmed aliens incarcerated in Federal Bureau of Prisons (BOP) and United States Marshals Service (USMS) facilities were unlawfully present in the United States.  Additionally, the report found that nearly 70 percent of known or suspected aliens in BOP custody had been convicted of a non-immigration-related offense, and 39 percent of known or suspected aliens in USMS custody had committed a non-immigration-related offense.
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  • Justice Department Requires Divestiture of Tufts Health Freedom Plan in Order for Harvard Pilgrim and Health Plan Holdings to Proceed With Merger
    In Crime News
    The Department of Justice announced today that it would require Harvard Pilgrim Health Care (Harvard Pilgrim) and Health Plan Holdings (fka Tufts Health Plan) to divest Tufts Health Freedom Plan Inc. (Tufts Freedom), in order to proceed with their merger. Tufts Freedom is Health Plan Holdings’ commercial health insurance business in New Hampshire. The department has approved UnitedHealth Group Inc. (United), as the buyer. Health insurance is an integral part of the American healthcare system, and the proposed settlement will maintain competition for the sale of commercial health insurance to private employers in New Hampshire with fewer than 100 employees.
    [Read More…]
  • U.S. Government Collects $7 Million in Iranian Assets for Victims of Terrorism Fund
    In Crime News
    The Justice Department announced the United States has collected $7 million of Iranian funds that will be allocated to provide compensation to American victims of international state-sponsored terrorism.
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    In Crime Control and Security News
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  • Justice Department Settles with Indiana School District to Resolve Disability Discrimination Investigation into School Seclusion and Restraint Practices
    In Crime News
    The Justice Department today announced a settlement agreement with the North Gibson School Corporation in Princeton, Indiana, to address and prevent the discriminatory secluding and restraining of students with disabilities.
    [Read More…]
  • Attorney General William Barr Delivers Video Remarks for the Virtual National Law Enforcement Training on Child Exploitation
    In Crime News
    Good morning, the Department of Justice is pleased to once again host the National Law Enforcement Training on Child Exploitation.
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    In Crime Control and Security News
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    In Crime Control and Security News
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    In Crime Control and Security News
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    In Space
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  • Individual Arrested and Charged with Operating Notorious Darknet Cryptocurrency “Mixer”
    In Crime News
    A dual Russian-Swedish national was arrested Tuesday at Los Angeles International Airport on criminal charges related to his alleged operation of the longest-running bitcoin money laundering service on the darknet.
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  • Houston man sent to prison for coercion and enticement via Kik
    In Justice News
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