DOJ Investigates Visa's Plaid Acquisition - Antitrust Concerns

The Department of Justice’s focus on antitrust concerns isn't limited to major technology companies.

On Monday afternoon, the Department of Justice indicated it is conducting an investigation into Visa’s planned $5.3 billion purchase of Plaid, a company that facilitates connections between applications and users’ bank accounts.

Plaid’s technology supports a significant number of emerging financial technology services, and the Justice Department has reportedly been examining the potential impact of the acquisition on the market for innovative financial services developed by startups for the past year.

The disclosure regarding the DOJ’s increased scrutiny of the Plaid acquisition stemmed from a filing submitted to the U.S. Court for the District of Massachusetts. This filing sought to compel Bain, the consulting firm assisting Visa with its bid for Plaid, to adhere to the agency’s civil investigative demand (CID).

The DOJ contends that Bain has been withholding requested documents by asserting a claim of privilege, which has effectively hindered the progress of the DOJ’s investigation.

“The Antitrust Division is dedicated to the prompt and comprehensive investigation of mergers,” stated Assistant Attorney for the Antitrust Division Makan Delrahim. “Gathering pertinent documents and data from third parties is crucial for our ability to assess these transactions. All too often, third parties attempt to avoid these requirements, hoping the division will redirect its enforcement efforts.”

The DOJ initially requested documents from Bain in June pertaining to Visa’s pricing strategies and its competitive standing against other debit card networks. The government’s intention was to utilize this information to evaluate the effects of Visa’s proposed acquisition on the wider financial services landscape. Bain declined to provide the documents, citing privileged information.

Visa’s pursuit of Plaid is not the sole large fintech acquisition under the DOJ’s review, as reported by The Wall Street Journal. Federal regulators are also examining Mastercard’s $1 billion offer for the fintech company Finicity, and Intuit’s $7 billion proposal to acquire Credit Karma, a credit advisory and lending marketplace.

“Our petition against Bain is intended to secure the necessary documents and to reinforce that the division will enforce compliance with the deadlines and specifications outlined in our CIDs,” Delrahim explained. “Third parties, including Bain, are obligated to fully and promptly comply with our civil investigative demands and supply the documents and data we require to fulfill our responsibilities and serve the public.”