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Illustration: Annelise Capossela/Axios

Companies have two basic choices when faced with an antitrust lawsuit from the U.S. Justice Department: Fight or flee. Visa plans to fight.

Driving the news: The credit card giant filed its legal response to DOJ's efforts to block its $5.3 billion purchase of fintech "connector" company Plaid. Its primary arguments are that regulators gerrymandered an industry definition and conjured competition.

Industry: The DOJ believes that Visa is a monopolist in the online debit card space, arguing that its market share exceeds 70%. Visa doesn't dispute that figure, but instead argues it's arbitrary.

  • Visa claims that the relevant industry is online payments, which would include not just online debit, but also credit cards and services like Apple Pay. Or at least would include other methods of direct debit from bank accounts, such as PayPal and using routing numbers to satisfy utility bills, etc.
  • Also worth noting is that Visa's overall debit card market share drops to 60%+ when in-person purchases are included (it increases for online since few e-commerce merchants accept PIN cards).

Competition: The DOJ argues that Plaid could become a major competitor in the online debit space, and that Visa's acquisition is designed to extinguish that nascent threat.

  • In short, Visa calls this nonsense, claiming Plaid has no online debit efforts in its product pipeline.
  • DOJ had obtained communications from a Visa biz dev exec who said that Plaid "threatens Visa" in terms of online debit, analogizing it to an underwater volcano that has explosive potential despite being barely visible. Visa asks in its reply for the entirety of those communications to be reviewed by the court.
  • A source familiar with the situation tells Axios that the executive was deposed by DOJ and testified that his statement — which was part of a research document from early 2019 — was not seen by senior Visa executives who had a decision-making powers on the Plaid deal.

Timing: There's also a dispute over when this trial might begin, with DOJ asking for next September and Visa saying it could be ready by late February. An upcoming case management conference should sort all of that out.

The bottom line: There's no structural remedy available here, because Plaid doesn't have an online debit business that Visa could divest. And there really isn't a Plaid rival of similar scale. So unless DOJ's next antitrust chief chooses to reverse course, this one is headed to court.

Go deeper: Read the DOJ's complaint and Visa's reply.

Go deeper

Visa and Plaid terminate merger agreement

A Visa card. Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Visa has terminated its proposed $5.3 billion purchase of Plaid, a San Francisco-based provider of analytics software that connects fintech startups to users' bank accounts, the Justice Department said in a statement.

Why it matters: The DOJ alleged in its civil antitrust lawsuit filed in November to block the merger that Visa is a "monopolist in online debit" and would eliminate Plaid's potential ability to compete in the online debit market.

DOJ watchdog to probe whether officials sought to alter election results

Donald and Melania Trump exit Air Force One in West Palm Beach, Fla., on Jan. 20. Photo: Alex Edelman/AFP via Getty Images

The Justice Department's inspector general will investigate whether any current or former DOJ officials "engaged in an improper attempt to have DOJ seek to alter the outcome" of the 2020 election, the agency announced Monday.

Driving the news: The investigation comes in the wake of a New York Times report that alleged Jeffrey Clark, the head of DOJ's civil division, had plotted with President Trump to oust acting Attorney General Jeffery Rosen in a scheme to overturn the election results in Georgia.

2 hours ago - Podcasts

Google's chief health officer Karen DeSalvo on vaccinating America

Google on Monday became the latest Big Tech company to get involved with COVID-19 vaccinations. Not just by doing things like incorporating vaccination sites into its maps, but by helping to turn some of its offices and parking lots into vaccination sites.

Axios Re:Cap goes deeper into what Google is doing, and why now, with Dr. Karen DeSalvo, Google's chief health officer who previously worked at HHS and as health commissioner for New Orleans.