The Department of Justice has filed an antitrust lawsuit challenging Visa’s proposed US$5.3 billion acquisition of Plaid, reported the Wall Street Journal.
News of the DOJ’s investigation first broke last month. “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.
A Visa spokesman told the WSJ the lawsuit is “legally flawed and contradicted by the facts…The combination of Visa and Plaid will deliver substantial benefits for consumers seeking access to a broader range of financial-related services, and Visa intends to defend the transaction vigorously.”
“Visa’s business faces intense competition from a variety of players—but Plaid is not one of them,” the spokesman added.
The Justice Department had been scrutinizing the deal since early this year. The Wall Street Journal reported last week that the transaction was facing legal jeopardy, with the department making preparations for potential litigation.
Plaid provides the technological infrastructure underpinning an array of next-generation financial apps, including Venmo, the digital money-transfer service owned by PayPal Holdings. It has been viewed by fintech companies and merchants as a platform that could one day enable consumers to make purchases without having to rely on debit and credit cards, instead allowing for payments to be made directly from a consumer’s bank account to a merchant’s account.
