Exhibit 6 — United States v. Visa Inc. (Dkt. 38-7, S.D.N.Y. No. 1:24-cv-07214)

Record facts

U.S. District Court for the Southern District of New York · No. 1:24-cv-07214-JGK · Doc. 38-7 · 2024-12-16 · Docket on CourtListener

Full text

EXHIBIT 6
Case 1:24-cv-07214-JGK     Document 38-7     Filed 12/16/24     Page 1 of 6

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 SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
OBCDUniC 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
------------------------------x 
UNITED STATES OF AMERICA, 
   Plaintiff, 
   v. 
 24 CV 97214 
VISA, INC., 
   Defendant.   
 Conference 
------------------------------x 
 New York, N.Y.   
 November 12, 2024 
 5:00 p.m. 
Before: 
HON. JOHN G. KOELTL, 
 District Judge 
APPEARANCES 
DEPARTMENT OF JUSTICE, ANTITRUST DIVISION 
 Attorneys for Plaintiff 
BY:  EDWARD WILLIAM DUFFY 
 BENNETT MATELSON  
 KEVIN KRAUTSCHEID 
 GREGG MALAWER 
WILKINSON STEKLOFF, LLP 
 Attorneys for Defendant 
BY:  BETH A. WILKINSON 
 KIERAN GAVIN GOSTIN 
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Case 1:24-cv-07214-JGK     Document 38-7     Filed 12/16/24     Page 2 of 6

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          SOUTHERN DISTRICT REPORTERS, P.C.
            (212) 805-0300
OBCDUniC                
The second course of conduct is about agreements that
Visa has entered into with certain technology partners.  These
are -- an example would be they have an agreement with Apple
whereby Visa has provided technology to Apple that allows Apple
Pay to work, which is a way you can pay debit and credit with
your phone.  And as part of those agreements, they allege that
we have -- and they're relying entirely on the written
agreements here.  They allege that we have essentially paid
them off not to compete.
So we've entered into these agreements with them, and
under the agreements, they're not allowed to compete in debit.
However, if you actually look at the terms of the agreements
which are incorporated by reference into the agreements, they
don't do that.  What they do is they say that if Apple decides
to become a competitor, Visa no longer has to continue to deal
with them and no longer has to provide their technology to
them.
So under the terms of the agreements themselves, we
don't think that's anticompetitive product, because there's
lots of law that says that there's no duty to deal with
competitors.
THE COURT:  Okay.  Mr. Duffy.  
MR. DUFFY:  Yes.  If I can just have a few minutes to
respond, you know, with our initial thoughts on the substantive
bases of the motion, and then I did want to follow up with our
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Case 1:24-cv-07214-JGK     Document 38-7     Filed 12/16/24     Page 3 of 6

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          SOUTHERN DISTRICT REPORTERS, P.C.
            (212) 805-0300
OBCDUniC                
view of the benefits of having the pre-conference letter still
submitted.
First, with respect to market definition, Mr. Gostin
referenced ACH, which you know, as we've put forward in our
complaint, it is our position that ACH is not in the same
market as debit network services, and there are a few reasons
for that.  I think one of the more important is that ACH simply
does not provide for a near instantaneous form of payment, and
for that reason, it is not reasonably interchangeable with
debit cards and cannot be used for many of the same types of
processes.
Mr. Gostin also indicated that there are several
criteria that we think are necessary for a product to be within
the market.  Fraud protections being one.  And although we do
say that the other smaller debit networks, called the PIN
networks, don't have as robust fraud capabilities as Visa does,
for a variety of reasons, they still do offer some type of
fraud protections that do set them apart from a basic ACH
product.  And as your Honor mentioned, to the extent there are
disputes about this, they are very much factual issues that we
don't think would be suitable for a motion to dismiss,
irrespective of the substance.
Going to the two types of conduct that Mr. Gostin was
talking about.  The volume based discounts, first, I think it's
important for us to point out we're not alleging a predatory
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Case 1:24-cv-07214-JGK     Document 38-7     Filed 12/16/24     Page 4 of 6

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          SOUTHERN DISTRICT REPORTERS, P.C.
            (212) 805-0300
OBCDUniC                
pricing theory of harm under that theory.  What the United
States is alleging is that Visa has created incentive
structures with their contracts with merchants and with banks
that are tantamount to exclusive dealing because of the nature
of the terms that are set forth.
So what Visa does is that there are certain
transactions that a merchant is going to have no choice but to
use Visa for routing that transaction.  Visa is able to
leverage those non-contestable transactions and create pricing
structures that make it entirely uneconomical for merchants and
their banks to consider alternative networks for those
transactions that the networks could compete for.  And, you
know, we think the law is quite clear that that type of de
facto exclusive dealing is a cognizable violation of the
Sherman Act, both as monopolization and an unreasonable
restraint on trade.
And then, finally, with respect to the tech partner
contracts that Mr. Gostin was discussing, the key
anticompetitive element of those agreements is not Visa
refusing to deal.  It is, instead, the nature of the threat of
basically telling potential competitors if you do not compete
with me, I will provide you with lucrative incentives, and if
you do choose to complete with me, I am going to impose
penalties upon you.  So it is not a duty to deal situation as
much as it is an incentive being offered to not compete with
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Case 1:24-cv-07214-JGK     Document 38-7     Filed 12/16/24     Page 5 of 6

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          SOUTHERN DISTRICT REPORTERS, P.C.
            (212) 805-0300
OBCDUniC                
Visa.
And then if I can briefly just address kind of the
process issue of the three-page pre-motion letter.  When
agreeing to the briefing schedule, the United States was very
interested in ensuring that we would have Visa's letter
outlining the bases of its motion to help us, you know, kind of
get a head start on the response to a motion to dismiss given
the holiday schedule and so forth.  It was kind of important
for us to be able to get a better sense as to what their
arguments would be.  So we think we would benefit very much
from having that letter on November 20 as Visa committed when
proposing that schedule.
We also think, and the parties have submitted some
letters dealing with the issue of discovery, and we think that
the Court will eventually need to decide whether discovery can
commence while a motion to dismiss is pending.  And we do think
that the three-page letter would help the Court in that
determination when the issues is properly before the Court.
THE COURT:  I must say I'm unpersuaded that the
letters would do anything.  You've heard from Visa the
arguments that it intends to make.  I'm sure you all can talk
among yourselves.  But as far as I'm concerned, it appears to
be unnecessary paper.
I also don't think that that exchange of letters is
going to sufficiently inform me of the merits or lack of merits
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Case 1:24-cv-07214-JGK     Document 38-7     Filed 12/16/24     Page 6 of 6

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