Discover Card Accuses Visa of Illegal Antitrust Activity, Files Antitrust Lawsuit
On Tuesday, November 25th, Discover filed an antitrust lawsuit against Visa, alleging that the company is intentionally aggressive in order to maintain a monopoly over the credit card market.
“In order to maintain its monopoly, Visa has undertaken a series of illegal actions that undermine competition – harming rival debit networks, merchants, acquirers, card issuers and consumers,” the federal filing said. Discover, through its Pulse Network unit, “seeks to enjoin Visa’s ongoing violations of antitrust laws, receive compensation for lost profits, and promote healthy competition for general purpose debit card network services in the United States.”
One of the accusations involves signature debit cards vs. PIN debit cards. PIN – personal identification number – is generally considered safer than a signature, but Discover alleges that Visa pushed for signature debit cards due to their ease of use, and so that the card company would dominate market share. “Visa dominates the provision of signature debit network services, maintaining a market position based on charging higher fees for its services and earning higher profits. Permitting the superior PIN debit to predominate in the marketplace would cost Visa a lot of money. Accordingly, Visa has a long history of making sure that does not happen, including undertaking illegal behavior to fend off competitive threats to its debit network services monopoly.”
“Around the same time that Visa was illegally ensuring that signature debit would become predominant in the United States, Visa imposed a rule prohibiting any of its issuing financial institutions from also issuing signature debit cards on competitor networks such as Discover,” the lawsuit said. “By 2004, the illegal practices that Visa had used to acquire its debit network monopoly had been struck down and eliminated. But by then it was too late. Over 70 percent of debit cards in the United States bore the Visa brand and nothing in the resolution of the prior antitrust cases changed that. Visa’s debit network pricing reflected its resulting dominant position.”
Discover’s antitrust lawsuit hinges on the Durbin Amendment, which went into effect in October 2010. The amendment mainly deals with swipe fees, capping their amount so that merchants and consumers do not face penalties every time they use their debit cards for small purchases. However, a coalition of merchants sued the Federal Reserve for overstepping the bounds of Congress, and a judge ruled in their favor in 2013.
Although the Durbin antitrust amendment is still very much up in the air, Discover claims that Visa has skirted the intent of Durbin, and asks for more stringent rules governing the card company’s business choices.
The Strom Law Firm Can Help with Antitrust Lawsuits
The Strom Law Firm LLC’s business litigation practice is focused on representing individuals, officers, directors, public companies, and private corporations involved in complex civil disputes. We concentrate our resources and efforts on business and commercial litigation involving:
- Breach of contract claims
- Business fraud
- Interference with business activities or unfair competition
- Antitrust lawsuits / price-fixing allegations
- Bank and lender liability
- Insurance fraud and Securities Fraud
- False Claims Act / “qui tam” whistleblower cases
- Breach of warranty claims
A South Carolina federal defense attorney at the Strom Law Firm, LLC will fight tirelessly to defend you against South Carolina antitrust violations. Founded in 1996 by a former US Attorney, we know what it takes to defend crimes not only on a state level, but also on a federal level as well. We are here to help you. Contact an experienced South Carolina federal antitrust defense attorney at the Strom Law Firm today for a free consultation. 803.252.4800