A top Department of Justice official says the agency’s successful effort to keep credit card giant Visa from acquiring — and potentially shutting down — financial technology innovator Plaid shows how the nation’s antitrust laws can be used to encourage competition that benefits businesses and consumers alike.
“Instead of competing against Plaid … Visa decided to buy it,” Associate Attorney General Vanita Gupta said. “That was one example of protecting competition to make sure that large, dominant incumbents can’t buy off or merge with innovative entrants to protect their market power.”
Gupta, who is in charge of a broad portfolio of issues including antitrust, civil rights and consumer protection among others, was a keynote speaker as more than 100 in-house lawyers from some of the nation’s most prominent retail brands gathered virtually last week for NRF’s inaugural Retail Law Summit. Gupta addressed top issues affecting retailers during a “fireside chat” with NRF Chief Administrative Officer and General Counsel Stephanie Martz.
Visa was set to buy Plaid, which was working to establish a new payments system allowing consumers to bypass expensive networks like Visa, when the DOJ filed a lawsuit last year saying the acquisition would violate federal antitrust law. Visa canceled the plans this January.
Martz said the DOJ action “was an important step in the right direction for opening up competition in the financial services market,” and Gupta agreed that Plaid “may, if left independent of Visa, have a chance to compete against Visa by offering retailers new and perhaps even cheaper ways to process consumer transactions.”
NRF is supportive of payments alternatives offered by companies like Plaid because credit and debit card swipe fees charged by banks and traditional card networks like Visa are one of retailers’ top expenses, totaling $116.4 billion as of 2019. The swipe fees drive up prices paid by the average household by hundreds of dollars a year.
“We are always on the lookout for these issues,” Gupta said. “The ability to use our antitrust laws to protect innovation is a really core part of the health of our economy.”
NRF had called on the DOJ to “carefully scrutinize” the Plaid acquisition, and Gupta said the department often turns to NRF and its members for better understanding of how technology works in the payments market or how payments can be more cost effective.
During a fast-paced session with Martz, Gupta also covered topics ranging from websites to police reform:
Website ADA compliance
Lawsuits filed by visually impaired consumers claiming some retailers’ websites do not comply with the Americans with Disabilities Act have increased dramatically in recent years even though the ADA does not explicitly apply to websites. Gupta said the DOJ has no immediate plans to issue formal regulations on the topic but does plan to address the issue.
“We are cognizant of the desire by many to have some greater clarity and guidance and we are looking into all of that,” Gupta said. In the meantime, the agency considers “functional access” to be the key to ADA compliance more than adherence to specific standards.
Martz said retailers want their websites to be usable by all customers but that the lack of regulations — which were drafted under former President Barack Obama and then pulled back under former President Donald Trump — have resulted in frivolous lawsuits.
Check out the NRF Retail Law Resource Center for more information on legal matters in the industry.
Asked about a provision in President Joe Biden’s recently signed executive order on competition that would bar employee non-compete requirements used by some retailers, Gupta said the department believes “it is a high priority to empower workers” and that a “freely competitive labor market is essential.”
Gupta said a number of scams targeted at the elderly “flow through the checkout lanes of American retailers” when criminals try to convince an older person to purchase a gift card and send them the card numbers as a way of transferring money. But she praised retailers’ “significant collaboration” with the department to stop the fraud.
Police reform has been at the top of the national agenda since the 2020 murder of Minneapolis resident George Floyd, but Gupta said solving the issue will involve more than changing how police departments operate.
“Public safety is not just a policing issue and criminal justice issue,” she said. “It’s actually a health issue. It’s a jobs issue. It’s an education issue. … There’s a lot more that brings us together on these issues than brings us apart.”