U.S. Sen. Dick Durbin, D-Ill., on June 9 made a brief appearance before the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights, warning lawmakers of the need to investigate possible collusion between Visa Inc. and MasterCard Worldwide in the setting credit and debit card interchange rates.
Durbin also expressed concern about the “full-court press” Visa and MasterCard are mounting against his amendment within the financial-reform bill to regulate debit-interchange. Discussions are under way to reconcile the Senate and House versions of the bill (see story).
“We’re being told ... that many credit unions and banks are being warned that if the Durbin amendment is not rejected in conference, that whatever hit they take on the interchange fees from the largest banks they’re going to pass along to the smaller banks that are not covered by the amendment,” Durbin said. “This to me is way beyond free-market competition. It’s a matter of record to my colleagues and for these two major credit card giants that their activity is a matter of great concern and should be scrutinized.”
Durbin told antitrust officials he believes Visa and MasterCard “coordinate (their efforts) in many, many ways.” He noted that a letter he sent on May 27 to both payment networks warning them that they may raise antitrust concerns if they “collude” with larger banks to oppose interchange-rate regulation and “frighten” smaller banks into joining their cause.
Visa and MasterCard control “about 80%” of the credit card market, Durbin contended, noting he has been concerned for some time about their market dominance. “It troubles me that merchants cannot negotiate with (the networks) ... and that Visa and MasterCard can use their market power to prevent merchants from using different types of payments,” Durbin said.
Christine A. Varney, assistant attorney general for the antitrust division of the U.S. Department of Justice, confirmed to Durbin that the government has an “open investigation” into possible antitrust activities surrounding the roles Visa and MasterCard play in the payments marketplace.
Visa and MasterCard officials declined to comment.
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