US trust-busters target Visa and Mastercard

The Department of Justice has taken credit card suppliers Visa and Mastercard to court, alleging anti-competitive practices. The case is spoken of as a follow-up to Justice's success in breaking-up Microsoft, but in fact began two years ago. Visa and Mastercard between them control 75% of the US credit card market. The Department of Justice alleges the two companies have reached this position of dominance by exclusivity rules which stop banks which use Visa/Mastercard on their credit cards from putting other companies on the cards. It is also concerned that banks are too close, because they become shareholders in the network and put members on the boards of both companies. The effect of this is, allegedly, to reduce competition which would be to the advantage of the consumer, make it difficult for other credit card companies to compete, and to slow technical innovation. The defence case is likely to turn on the issue of who built the network? And, why should rivals piggy-back on their work? The case is being heard in the Federal Court for South Manhattan, which gets most of the big banking and Wall Street cases in the States. (US, 13/06/2000)