LETTER addressed to Judge John G. Koeltl from Craig Conrath dated June 2, 2025… — United States v. Visa Inc. (Dkt. 81)

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Letter dated June 2, 2025 to the Honorable John G. Koeltl from Plaintiff United States in United States v. Visa Inc. It addresses the NicSand case, which it says Visa cited for the first time during the hearing, and states that NicSand does not support granting Visa's motion to dismiss. It states that NicSand involved up-front discounts, multi-year contract terms, and exclusivity, and that this case does not involve allegations about up-front discounts to customers. It states that the Complaint alleges Visa had monopoly power when it began its exclusive dealing campaign. The letter is signed /s/ Craig Conrath of the Department of Justice Antitrust Division.

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Liberty Square Building 
450 5th Street, N.W. 
Washington, DC 20530 
June 2, 2025 
 
Via ECF 
 
Honorable John G. Koeltl 
United States District Judge 
Southern District of New York 
500 Pearl Street 
New York, NY 10007 
 
Re: 
United States v. Visa Inc., Case No. 1:24-cv-07214-JGK 
 
Addressing NicSand, Inc. v. 3M Co., 507 F.3d 442 (6th Cir. 2007) 
 
Dear Judge Koeltl: 
 
Plaintiff United States appreciates the opportunity to address the case of NicSand, Inc. v. 3M Co., 
507 F.3d 442 (6th Cir. 2007), which Visa cited for the first time during the Rule 12(b)(6) hearing.  
For the reasons discussed below, NicSand does not support granting Visa’s motion to dismiss.   
Visa argued that this Court should adopt a price-cost test rather than the rule-of-reason analysis 
to evaluate certain conduct at issue in this case and cited NicSand in response to the Court’s 
request for a case making such a finding at the motion to dismiss stage. NicSand stands for the 
basic proposition that “one competitor may not use the antitrust laws to sue a rival merely for 
vigorous or intensified competition.”  507 F.3d at 450.  There, the plaintiff challenged three 
aspects of the defendant’s conduct: upfront discounts, multi-year contract terms, and exclusivity.  
The court’s analysis of each shows the clear distinctions with this case.  
Up-front discounts. First, the court addressed the plaintiff’s pricing allegations (the “up-front 
discounts”) separately from the other aspects of the defendant’s contracts.  507 F.3d at 451-53, 
453-57.  The NicSand court did not try to analyze an exclusive dealing allegation as if it were a 
pricing allegation, as Visa seems to suggest this Court should do here. While the court in 
NicSand did consider the price-cost test in its evaluation of defendant’s upfront discounts, id. at 
451-53, this case does not involve allegations about up-front discounts to customers.  
Multi-year terms.  In NicSand, the defendant entered into multi-year contracts with customers. 
Id. at 453.  The court did not use the price-cost test to analyze this aspect of the defendant’s 
conduct.  Instead, the court found that the plaintiff could have offered similar deals to customers, 
but simply chose not to.  Id.  Here, in contrast, the Complaint alleges that other debit competitors 
have no ability to compete for transactions that merchants must route exclusively to Visa, even 
when those competitors could offer a lower per-transaction price.  See, e.g., Compl. ¶¶ 77-79. 
Case 1:24-cv-07214-JGK     Document 81     Filed 06/02/25     Page 1 of 2

 
 
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Exclusivity.  As with the multi-year terms, the court did not engage in a price-cost analysis of the 
exclusivity of the agreements.  507 F.3d at 453-57.  Indeed, the court acknowledged that 
“exclusive agreements in some instances may create impermissible barriers for new entrants to a 
market and may permit a supplier to charge monopoly prices [citing Tampa Electric],” id. at 454, 
and further noted that “should 3M use these contracts and its current market dominance to 
establish unreasonable barriers to entry in the future, a potential competitor might have a 
legitimate antitrust claim,” id. at 457.  Both of these statements were made without any qualifier 
as to a price-cost test.  
Additionally, when analyzing exclusivity, the court looked to the realities of the market at issue 
and the effect of the defendant’s conduct.  The court explained that the de facto exclusive 
agreements to offer only one brand of sandpaper in NicSand were required by the customers 
(retailers)—not imposed by 3M—and were open to bidding by any of the suppliers. NicSand, 
507 F.3d at 454 (“If retailers have made supplier exclusivity a barrier to entry, one cannot bring 
an antitrust claim against a supplier for acquiescing to that requirement.”).  The NicSand retailers 
employed de facto exclusive agreements to benefit themselves—3M’s customers— to simplify 
planning and reduce costs.  Id. at 447-448.  By contrast, in this case, there is no allegation that 
customers (merchants) “made exclusivity a condition for doing business with” Visa (id. at 454).  
Rather, Visa is the one using its monopoly power to leverage merchants into accepting the de 
facto exclusive arrangements.  See, e.g., Compl. ¶¶ 73, 79, 102 (alleging that Visa demands and 
enforces exclusivity from merchants and acquirers).  As alleged in the Complaint, Visa imposed 
de facto exclusive agreements in order to sideline its would-be competitors and protect its 
monopoly, thereby maintaining its supracompetitive prices and high profit margins.  See id. ¶¶ 
22, 66, 70-74, 98, 165-166. 
The NicSand court also pointed to the fact that 3M did not have monopoly power when it began 
entering exclusive arrangements with retailers (rather, it was NicSand that was in the “dominant 
position”).  NicSand, 507 F.3d at 455.  By contrast, here the Complaint alleges that Visa had 
monopoly power when it began its exclusive dealing campaign and acted with the goal of 
blocking out competition and maintaining its monopoly position. Compl. ¶¶ 6-9, 70-79, 95, 167.   
Finally, the case of ZF Meritor v. Eaton, 696 F.3d 254 (3d Cir. 2012), which applied the rule-of-
reason standard over the price-cost test, is a more recent and more factually analogous case than 
NicSand.  ZF Meritor, as well as FTC v. Syngenta, 711 F. Supp. 3d 545 (M.D.N.C. 2024), 
expressly distinguished NicSand in holding that an antitrust challenge to an exclusive dealing 
program can proceed without a showing of below-cost pricing.  ZF Meritor, 696 F.3d at 272, 
274, 275, 285; Syngenta, 711 F. Supp. 3d at 574-76.  
In sum, NicSand does not support granting Visa’s motion to dismiss.  
 
 
Sincerely, 
 
/s/ Craig Conrath 
Craig Conrath 
U.S. Department of Justice  
Antitrust Division 
 
Case 1:24-cv-07214-JGK     Document 81     Filed 06/02/25     Page 2 of 2

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