Visa $5.3 Billion Plaid Deal Triggers DOJ Antitrust Worries
(Bloomberg) -- Visa Inc.’s $5.3 billion acquisition of Plaid Inc. has raised competition concerns at the U.S. Justice Department, which is nearing a decision about whether to sue to block the deal, according to two people familiar with the matter.
Lawyers at the Justice Department’s antitrust division who are investigating the takeover are worried the deal could allow Visa to acquire a potential competitor, said the people. The division’s leadership hasn’t made a final decision about whether to sue.
Regulators have long had antitrust concerns about the market power Visa and its rival Mastercard Inc. wield over global payments systems. The two have faced pressure to lower the fees they set on card payments from governments around the world, including in the U.S.
The companies have grown worried in recent years about the rise of apps such as PayPal Holdings Inc.’s Venmo, which allows consumers to send money to friends, families and merchants all without using Visa or Mastercard’s rails. Those fears are partly behind the networks’ efforts to move beyond card payments, prompting Visa to agree to acquire Plaid in January, while Mastercard announced a deal for a rival technology company Finicity in June.
With Plaid, Visa would gain access to 200 million consumer bank accounts and 2,600 financial technology apps. Those connections would help the company further its push into new areas like real-time payments and digital wallets.
On Tuesday, the Justice Department filed a petition in U.S. federal court in Boston to force consulting firm Bain & Co. to comply with a civil investigative demand the government issued in June as part of the merger investigation. The U.S. said Bain, which did consulting work for Visa, has improperly withheld documents demanded by the investigative demand, which is akin to a subpoena, and stymied the department’s investigation.
Bain worked on a Visa project, whose name is blacked out in court papers. The department said the project’s documents are an important part of its investigation to determine whether the Plaid deal will tend to increase Visa’s market power.
The Justice Department’s scrutiny of the Plaid deal comes as antitrust chief Makan Delrahim is focusing greater attention on competition in financial services and the ways new technology is disrupting existing business models. In August, he reorganized the division to create a section devoted to financial services.
The Justice Department, Visa and Plaid declined to comment. The Wall Street Journal reported earlier on the department’s concerns about the deal
In July, Visa acknowledged it needed more time to satisfy regulators’ concerns.
“We certainly are expecting to close by the end of the calendar year and are doing everything we can to comply with any request from the regulators that are looking at it,” Chief Executive Officer Al Kelly told analysts on a conference call.
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