Visa falls on report of US DoJ lawsuit alleging debit-card monopoly

Date:

Share post:


By Manya Saini and Niket Nishant

(Reuters) – Visa shares fell 3% on Tuesday after a report said the U.S. Department of Justice plans to file a lawsuit against the world’s largest payment processor, alleging it illegally monopolized the country’s debit-card market.

The antitrust division of the regulator is set to file a lawsuit as soon as Tuesday, accusing Visa of a range of anti-competitive conduct, Bloomberg News reported on Monday, citing people familiar with the matter.

“We believe this is an immediate negative to shares but we caution these types of antitrust cases are notoriously known for long/winding paths in the U.S.,” boutique equity research firm Monness, Crespi, Hardt & Co said.

Visa did not immediately respond to a Reuters request for comment.

FRESH ANTITRUST SCRUTINY

The company has been facing heightened scrutiny from regulators and lawmakers for years, battling allegations of a duopoly with Mastercard. Both companies say they operate in a highly competitive environment.

“The concern appears to be that Visa is using volume-based discounts to discourage merchants from diverting debit volume to other networks,” brokerage TD Cowen said.

“It appears to us that Justice needs to argue that Visa providing discounts creates a barrier to entry for new rivals that could have driven down pricing even more.”

News of the potential lawsuit comes months after another major legal setback for the duo, when a judge rejected a $30 billion antitrust settlement under which Visa and Mastercard had agreed to limit the fees they charge merchants that accept their credit and debit cards.

Brokerage KBW estimated that the U.S. debit business likely represents 10% of Visa revenues at the high end. It said the potential lawsuit is unlikely to be material in the long-term but expects a prolonged road to resolution.

The prudent course of action for Visa would be to wait until the November election to “see the intentions of the next administration,” said Odysseas Papadimitriou, CEO of personal finance firm WalletHub.

“If the next administration’s intentions are anything similar to the current one, the goal should be to settle instead of fighting a legal battle. There is a lot of uncertainty when you have protracted court battles, especially against the government.”

Mastercard shares fell 1% in morning trade. Both stocks have underperformed broader markets this year, gaining 11% and 16.5% respectively, compared with the S&P 500’s near 20% gain.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Devika Syamnath)



Source link

Alexandra Williams
Alexandra Williams
Alexandra Williams is a writer and editor. Angeles. She writes about politics, art, and culture for LinkDaddy News.

Recent posts

Related articles

More human remains from Philadelphia's 1985 MOVE bombing have been found at a museum

PHILADELPHIA (AP) — Additional human remains from a 1985 police bombing on the headquarters of a Black...

Satire publication The Onion buys Alex Jones' Infowars at auction with help from Sandy Hook families

The satirical news publication The Onion won the bidding for Alex Jones' Infowars at a bankruptcy auction,...

Video appears to show a Ukrainian Leopard tank taking out a column of Russian armored vehicles

Ukraine released a video showing an attack on a Russian armored convoy.The brigade said a Leopard 2...

Iowa's list of the 35 lowest-performing schools now includes 12 from Des Moines

A dozen schools in Iowa's largest public school district have been identified by the state as "in...

At 8:21 a.m.: SpaceX set for Falcon 9 rocket launch from Florida’s Space Coast

SpaceX crews are preparing to launch a Falcon 9 rocket Thursday morning from Florida’s Space Coast.SpaceX is...

Sinkhole Swallows Motorcycles in Madrid After Water Pipe Breaks

A sinkhole caused by a burst water pipe forced a partial road closure in Madrid, Spain, on...

First-Ever Amber Discovered in Antarctica Shows Rainforest Existed Near South Pole

Imagine a time machine that could whisk you back to the age of the dinosaurs. Suddenly, you...

China's president will unveil a megaport in Peru, but locals say they're being left out

CHANCAY, Peru (AP) — On the edge of Peru’s coastal desert, a remote fishing town where a...