The Justice Department opposed the deal, calling it anti-competitive
of ConsumerAffairs
The deal is off. Visa and Plaid have announced they are dropping their plans to merge due to opposition from the U.S. Justice Department.
Visa previously agreed to acquire Plaid, a fintech company, for $5.3 billion dollars. But the Justice Department filed suit in November to block the deal, calling it anti-competitive.
Government lawyers said Plaid was developing a payments platform that posed a challenge to what they called Visas monopoly. According to the complaint, the transaction would have enabled Visa to eliminate competition with its online debit business before Plaid had a chance to succeed.
Previously, Visa said it would defend the deal in court, and a trial was scheduled for June.
We are confident we would have prevailed in court as Plaids capabilities are complementary to Visas, not competitive, said Al Kelly, Chairman and CEO of Visa. We believe the combination of Visa with Plaid would have delivered significant benefits, including greater innovation for developers, financial institutions, and consumers.
Kelly said Visa reconsidered the deal after determining the litigation would be protracted and complex and would likely take years to resolve.
Victory for consumers
In a victory for American consumers and small businesses, Visa has abandoned its efforts to acquire an innovative and nascent competitor, said Assistant Attorney General Makan Delrahim of the Justice Departments Antitrust Division. American consumers and business owners rely on the internet to buy and sell goods and services, and Visa, which has immense power in online debit in the United States, has extracted billions of dollars from those transactions.
Delrahim said the merger would have ended up raising costs for both consumers and businesses. He said Plaid and other fintech innovators should be free to develop potential alternatives to Visas online debit services.
With more competition, consumers can expect lower prices and better services, he said.
Visa and Plaid said it was a mutual decision to abandon the deal. Zach Perret, CEO and co-founder of Plaid, said demand for the companys services has increased during 2020 and that it will focus its efforts on enhancing that service.
While Plaid and Visa would have been a great combination, we have decided to instead work with Visa as an investor and partner so we can fully focus on building the infrastructure to support fintech, he said.