The US Justice Department has sued to block Visa's $5.3 billion acquisition of bank data sharing startup Plaid, citing competition concerns. Visa says the effort is "legally flawed and contradicted by the facts".
The DoJ filed its antitrust complaint in federal court on Thursday in an effort to scupper the blockbuster takeover, insisting it "must be stopped".
Says the suit: "Visa seeks to buy Plaid - as its CEO said - as an 'insurance policy' to neutralize a 'threat to our important US debit business.'
"Visa is a monopolist in online debit transactions, extracting billions of dollars in fees annually from merchants and consumers. Plaid, a financial technology firm with access to important financial data from over 11,000 US banks, is a threat to this monopoly: it has been developing an innovative new solution that would be a substitute for Visa’s online debit services.
"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".
In response, Visa has issued a statement saying the DoJ's suit "reflects a lack of understanding of Plaid’s business" and that Plaid is "not a payments company" and not a competitor.
The card giant argues that the deal is good for consumers and for competition and says that it will "defend the transaction vigorously".