TOTM
Assessing the Government’s Monopolization Case Against Visa
Truth on the Market
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The U.S. Justice Department (DOJ) has initiated an antitrust monopolization case against Visa for various practices related to its debit-card services. The complaint centers on two primary theories of harm. The first is that Visa offers volume discounts in a manner that locks in merchant banks (or “acquirers”) into Visa’s debit-card network, which deprives rival networks of “scale” and reduces the overall level of competition in the debit-card market. The second is that Visa is buying off potential competitors such as Apple with agreements that effectively share Visa’s monopoly profits so that Apple becomes an invested partner, rather than a potential threat.