DOJ: Visa, Mastercard Violated Sherman Act

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Government body finds two card industries imposed anti-competitive restrictions that hurt merchants and consumers

Small merchants and their customers scored a win last month when the Antitrust Division of the Department of Justice (DOJ) found Visa and MasterCard guilty of violating the Sherman Act with their anti-competitive and deceptive credit card pricing policies.

"This is a historic move by the Department of Justice, and a significant step towards a more competitive market," Hank Armour, CEO of NACS, said in a released statement. "For the first time in history, the Visa and MasterCard stranglehold prohibiting price competition on cards is being broken. With price competition on cards, consumers and small businesses win. After vigorously fighting these reforms on Capitol Hill for years, it is a major breakthrough to have these much needed reforms forced upon the credit card cartels by the Department of Justice."

Visa and MasterCard’s current policies prohibit merchants from informing customers about credit card fees or offering them discounts for paying with cheaper payment options. This is the first time that the Department of Justice intervened against the anticompetitive practices to force price competition. With the decision last month, merchants were be able to offer consumers discounts between cards — which will for the first time ever force the cards to compete on cost.

"These anti-competitive practices have gone untouched for decades," said Jennifer Hatcher, vice president of government relations, at the Food Marketing Institute. "The Department of Justice deserves credit for taking on the card giants. We look forward to their continued investigations into the bad behavior of the credit card industry."

The Department of Justice action against Visa and MasterCard found the two credit card companies imposed anti-competitive restrictions that hurt consumers and merchants. The DOJ found restrictive credit card policies created a market lacking access to adequate information or choice and prohibiting merchants from offering discounts.

The top 10 card issuers now have more than 90 percent of the market, and the level of concentration has increased to a level that the Department of Justice Merger Guidelines define as highly concentrated. The current rules prohibit merchants from offering discounts to customers who use less expensive forms of payment and forbid businesses from informing their customers about the real costs of processing credit cards.