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MEMORANDUM OPINION AND ORDER re: 37 MOTION to Dismiss for Failure to State a… — United States v. Visa Inc. (Dkt. 89)
No. 1:24-cv-07214-JGK · Doc. 89 · Docket on CourtListener
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A Memorandum Opinion and Order by District Judge John G. Koeltl in United States of America v. Visa, Inc., No. 1:24-cv-07214-JGK, in the U.S. District Court for the Southern District of New York, filed June 23, 2025 as Document 89. The Government's complaint alleges that Visa monopolized the United States market for general purpose debit network services in violation of Sherman Act § 2, 15 U.S.C. § 2, and entered contracts in violation of Sherman Act § 1, 15 U.S.C. § 1. Visa moved to dismiss, arguing an implausible product market, no allegation of pricing below its costs, and contract terms that defeat the alleged agreements not to compete. The court denies the motion, stating that Visa requests the premature resolution of factual issues at the pleadings stage. The 58-page opinion describes debit card networks, fintech debit and interbank payment networks.
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Case 1:24-cv-07214-JGK Document 89 Filed 06/23/25 Page 1 of 58
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
────────────────────────────────────
UNITED STATES OF AMERICA,
Plaintiff, 24-cv-7214 (JGK)
- against - MEMORANDUM OPINION AND
ORDER
VISA, INC.,
Defendant.
────────────────────────────────────
JOHN G. KOELTL, District Judge:
In the not-too-distant past, consumers and merchants
transacted primarily using cash. In the 1960s, ATM cards
proliferated, enabling cash access at the point of sale. In
around 1990, debit cards eliminated the need for cash altogether
by enabling consumers to pay for purchases by drawing directly
on their bank accounts. More recently, financial technology
(“fintech”) firms began offering alternatives to debit cards
such as PayPal and Cash App Pay.
For decades through today, Visa, Inc. has operated the
largest debit network in the United States. This case is about
whether, in seeking to increase and protect its debit card
network, Visa violated the federal antitrust laws.
The Government brought this action alleging that Visa
monopolized and attempted to monopolize the United States market
for general purpose debit network services, in violation of
Sherman Act § 2, 15 U.S.C. § 2, by using contracts with banks
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and merchants that restrained trade unreasonably, as well as
unlawful agreements not to compete with competitors and
potential competitors. The Government also alleges that Visa
entered into both types of contracts in violation of Sherman Act
§ 1, 15 U.S.C. § 1. The crux of the complaint is that Visa used
de facto exclusive dealing contracts to prevent Visa’s rivals in
debit from ever having the opportunity to compete effectively,
and fashioned customized incentive contracts to stymie market
entry by fintech firms.
Visa moved to dismiss the Government’s complaint on three
grounds. First, Visa argues that the Government’s alleged
product market is implausible because it excludes other payment
networks that, like debit networks, move money between bank
accounts. Second, Visa argues that the complaint fails to allege
anticompetitive conduct and thus harm to competition because the
complaint does not allege that Visa discounted prices for Visa
debit to below its costs. Third, Visa contends that the terms of
its current contracts disprove and defeat the allegation that
Visa agreed with competitors and potential competitors not to
compete.
Because Visa requests the premature resolution of factual
issues at the pleadings stage, and for the additional reasons
explained below, Visa’s motion to dismiss is denied.
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I. Factual Background
Unless otherwise noted, the following facts are taken from
the complaint (“Compl.”), ECF No. 1, and are accepted as true
for purposes of the present motion to dismiss.1
A. Debit Transactions
Debit transactions draw funds immediately and directly from
the consumer’s bank account. Compl. ¶¶ 24, 26. Tens of millions
of Americans prefer to transact or must transact using debit.
Id. ¶¶ 1, 27, 28. A debit transaction involves several actors,
including the consumer, the merchant, and their respective
banks. Id. ¶ 2. In the debit industry, the consumer’s bank is
called the “issuer” and the merchant’s bank is called the
“acquirer.” Id. ¶ 4.2 Debit networks are the intermediaries that
facilitate debit transactions. Id. ¶¶ 3–4, 29.
When a consumer pays using debit, the merchant selects a
debit network for the transaction and requests payment through
its acquirer. Id. ¶¶ 4, 35. The acquirer then sends the
consumer’s information to the debit network. Id. ¶ 35. Using
that information, the debit network asks the issuer for
authorization. Id. If the consumer has sufficient funds and
1 Unless otherwise noted, this Memorandum Opinion and Order omits all
internal alterations, citations, footnotes, and quotation marks in
quoted text.
2 Issuers and acquirers may work with processors that connect banks
with debit networks. Id. ¶ 30 nn. 1–2. Unless otherwise specified,
issuers and issuer processors are referred to together, and acquirers
and acquirer processors are also referred to together. Id.
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there are no indications of fraud, the issuer places a hold on
the funds and sends an authorization over the debit network to
the acquirer. Id. At this step, the issuer also deducts an
“interchange fee,” paid by the acquirer to the issuer for the
issuer’s services. Id. At the last step, the acquirer sends the
authorization to the merchant, who completes the transaction.
Id. These steps typically transpire in seconds. See id. ¶ 36.
B. Debit Networks
To facilitate transactions, debit networks provide
consumers with a unique credential that is ready for use at all
merchants participating in the network. Id. ¶ 31. Behind the
scenes, debit networks facilitate the transfer of funds by
providing “rails”—the means through which banks communicate and
transfer funds. Id. Debit networks allegedly also provide
payment guarantees for merchants, dispute and chargeback
capabilities for consumers and issuers, and fraud protections
for all parties. Id.
Banks, not debit networks, ultimately move money from
consumers to merchants. Id. ¶ 32. But debit networks clear and
oversee the interbank settlement process. Id. Each day, debit
networks aggregate all transactions for each bank, net out
applicable fees, and provide banks with daily settlement
reports, which banks then use to transfer funds among
themselves. Id.
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A debit network can process a transaction only where the
debit network connects to both the issuer and the acquirer and
is accepted by the merchant for the particular transaction. Id.
¶¶ 4, 30, 54. A debit network’s desirability and effectiveness
therefore depend on the breadth of the network’s acceptance and
enablement by all participants. Id. ¶ 55. Put another way, debit
networks operate in a two-sided market with strong indirect
network effects. See ¶¶ 5, 55, 154; see also Ohio v. American
Express Co., 585 U.S. 529, 535 (2018) (“Indirect network effects
exist where the value of the two-sided platform to one group of
participants depends on how many members of a different group
participate.”). Indirect network effects benefit incumbent debit
networks with widespread enablement by issuers and acceptance by
merchants; for smaller debit networks, lack of scale presents a
significant barrier to entry. Id. ¶¶ 170–71.
Debit networks generally charge (1) per-transaction network
fees to both issuers and acquirers; and (2) fixed network fees
to acquirers. Id. ¶¶ 22, 43. List prices for network fees are
called “rack rates.” Id. ¶ 12. Acquirers pass on at least some
network fees to merchants. See id. ¶ 45.
In using debit, acquirers (and thus merchants) incur
additional expense because acquirers pay interchange fees to
issuers for issuers’ services. Id. ¶¶ 44–45. For the largest
issuers with $10 billion or more in assets (“regulated
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issuers”), the Federal Reserve has capped the interchange fee
amount. See id. ¶¶ 44, 52; Corner Post, Inc. v. Bd. of Governors
of Fed. Reserve Sys., 603 U.S. 799, 805 (2024). For smaller,
unregulated issuers, “[t]he amount of the fee is set by the
payment networks, like Visa and Mastercard.” Corner Post, 603
U.S. at 805; Compl. ¶ 44.
C. Forms of Debit
In the United States, the most common form of debit is the
general purpose debit card. See id. ¶ 30. Other forms of debit
include alternative rails developed by fintech firms. Id. ¶ 60.
1. Debit Cards
Debit cards are issued by issuers that have contracted with
debit networks. Id. ¶ 30. When issuing debit cards, issuers
select one “front of card” network and place that network’s
graphic on the front of the card. Id. ¶¶ 4, 34, 38–39. The
issuer also chooses which “back of card” networks to enable and
may graphically identify those networks on the back of the card.
Id. Debit card credentials include a sixteen-digit card number
and other security features like the expiration date, card
verification value, security chip, and four-digit
personal-identification number (“PIN”). Id. ¶ 34.
The following figure illustrates the typical features and
graphic design of a debit card:
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Id. ¶ 34 Fig. 1.
Four front of card networks operate in the United States:
Visa, Mastercard, American Express (“Amex”), and Discover. Id.
¶¶ 40, 53.3 Visa is the front of card brand for over 70% of
debit-card payment volume in the United States. Id. ¶¶ 53, 67.
Mastercard comes in at second with around 25%. Id. Amex and
Discover comprise the remaining share. Id. In part due to
significant switching costs, issuers enter into long-term
contracts with either Visa or Mastercard for front of card
3 On May 18, 2025, Capital One acquired Discover. Capital One, Press
Release: Capital One Competes Acquisition of Discover,
https://investor.capitalone.com/news-releases/news-release-
details/capital-one-completes-acquisition-discover, (May 18, 2025).
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placement and rarely change their front of card network. Id.
¶¶ 40, 172.
On the back of the card, issuers have more networks to
choose from. See id. ¶ 41. Visa and Mastercard each operate an
affiliated back of card network: respectively, Interlink and
Maestro. Id. Other back of card networks include STAR, NYCE, and
Discover’s Pulse. Id. ¶¶ 41, 107. Visa and Mastercard debit
cards include Interlink and Maestro, respectively, as well as at
least one unaffiliated back of card network. Id. ¶ 41.
Back of card networks are often called “PIN networks”
because they require PIN entry for transactions where the
consumer taps or swipes their card. See id. ¶¶ 41, 56. But PIN
networks also offer “PINless” technology, which can process
debit transactions without PIN entry. Id. ¶ 56.
PINless technology is not automatically available; the
issuer must enable it for particular types of transactions. See
id. ¶ 42. Issuers may also decide not to enable PIN networks to
process certain types of transactions, such as transactions over
a set dollar amount or transactions with weak encryption. See
id. ¶ 58. In contrast, Visa and Mastercard are accepted by
nearly all United States merchants that accept debit; put
otherwise, merchant demand for Visa and Mastercard debit is
inelastic. Id. ¶¶ 170–71.
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Consumers can use debit cards for purchases at brick-and-
mortar stores for “card-present” (“CP”) transactions and online
for “card-not-present” (“CNP”) transactions. Id. ¶¶ 1, 28.
Today, CNP debit transactions comprise about half of all debit
spending. Id. ¶ 37. That number represents a dramatic increase
since 2010 and is still growing. Id.
For CNP transactions, debit card credentials are either
entered manually or pulled from a digital wallet. Id. As a
result, PIN entry almost never occurs online. Id. Instead, other
features like multifactor authentication help secure CNP
transactions. Id. Accordingly, if the issuer does not enable
PINless transactions, PIN networks are unable to process CNP
transactions. See id. ¶¶ 42, 56, 58.
2. Fintech Debit
“Fintech debit” refers to alternative debit rails developed
by fintech firms. Id. ¶ 60. Like debit card networks, fintech
debit networks require both consumer and merchant enrollment and
participation. Id. ¶ 117. But fintech debit networks rely
directly on the consumer’s bank account number, rather than a
debit card credential, and store the consumer’s bank account
number on the network for future use. Id. ¶¶ 61, 108, 113. In
that way, fintech debit networks can cut debit card networks out
of the transaction. Id. ¶ 108.
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In processing a transaction, fintech debit networks
communicate with the issuer to authorize and clear the
transaction, and then provide settlement services by initiating
a payment to the acquirer. Id. ¶ 61. At the final step, fintech
debit networks transfer funds using services provided by
“interbank payment networks.” See id. In addition, fintech debit
networks also provide dispute resolution and chargeback
capabilities for consumers and issuers, payment guarantees for
merchants, and fraud protections for all parties. Id. ¶ 113.
Fintech debit networks can be embedded in different payment
solutions, such as digital wallets. Id. ¶¶ 109, 116. Two types
of digital wallets exist. Id. ¶ 116. “Staged digital wallets”
like PayPal and Cash App enable consumers to pay with preloaded
funds or funds pulled from a linked bank account, either
directly or using a debit card credential. Id. “Pass-through
digital wallets” like Apple Pay and Google Pay transmit payment
credentials (such as a debit card number) directly to a
merchant’s acquirer. Id. The acquirer then uses the
passed-through credential to process the payment. Id.
D. Interbank Payment Networks
Interbank payment networks, like debit networks, transfer
funds between bank accounts. See id. ¶¶ 61, 159. In that sense,
interbank payment networks are lower-cost alternatives to Visa’s
debit offering. Id. ¶ 61.
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Three examples are Automated Clearing House (“ACH”), Real
Time Payment (“RTP”), and FedNow. Id. ¶¶ 61, 115. Offered by The
Clearing House or the Federal Reserve system, ACH has been used
for decades to facilitate interbank settlement and for recurring
fixed payments like disbursements and paychecks. See id. ¶¶ 115,
159. More recently, The Clearing House launched RTP and the
Federal Reserve launched FedNow. Id. ¶ 115. Both RTP and FedNow
are real-time interbank payment networks that facilitate
instantaneous transfers. Id.
Unlike debit networks, however, interbank payment networks
do not provide dispute resolution and chargeback capabilities
for consumers and issuers, payment guarantees for merchants, and
fraud protections for all parties. Id. ¶¶ 152–53, 159. Moreover,
ACH requires the consumer to enter and verify bank account and
routing information at each merchant. Id. ¶ 159. For merchants,
ACH is allegedly more subject to fraud than debit card
transactions. Id. In addition, ACH can take several days to
settle payment and even longer to make funds available. Id.
¶¶ 115, 159.
II. Factual Allegations
The Government’s allegations against Visa are summarized
below.
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A. Recent History
Until the early 2000s, Visa and Mastercard enjoyed
exclusive relationships with their respective issuers for both
credit cards and debit cards. Id. ¶¶ 48–49. In 2003, those
exclusivity agreements were held to be unlawful. United States
v. Visa U.S.A., Inc., 344 F.3d 229, 241 (2d Cir. 2003). Related
private litigation settled shortly thereafter. Compl. ¶ 49.
Pursuant to that settlement, Visa and Mastercard each agreed to
provide merchants with the ability to accept the respective
brand’s debit cards without accepting the brand’s credit cards,
and vice versa. Id. Between 2006 and 2008, the landscape shifted
further as Visa and Mastercard both became independent public
corporations. Id. ¶ 50.4
Most banks continued to issue only Visa or Mastercard debit
cards. Id. Other networks rarely outcompeted Visa and Mastercard
for front of card placement because of Visa and Mastercard’s
unmatched scale of existing merchant relationships. Id. And
switching costs prevented Visa or Mastercard from easily
displacing the other. Id. Accordingly, debit cards often
featured only Visa or Mastercard, leaving merchants with only
one routing choice for many debit transactions. See id.
4 Previously, Visa and Mastercard operated as membership associations
owned exclusively by member banks. Compl. ¶ 48.
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In 2011, pursuant to the “Durbin Amendment,”5 the Federal
Reserve promulgated Regulation II (“Reg II”) and thereby
transformed the debit market. See id. ¶¶ 8–9, 51; Corner Post,
603 U.S. at 805. To improve routing choices for merchants
accepting debit, the Durbin Amendment required each debit card
to support at least two unaffiliated networks. Compl. ¶¶ 8, 51.
The Durbin Amendment also capped interchange fees paid to
regulated issuers. Id. ¶ 52; Corner Post, 603 U.S. at 805. With
a no-evasion rule, this interchange cap limited debit networks’
ability to incentivize issuers to switch networks, or fully to
compensate issuers’ switching costs. Compl. ¶ 52.
Effective 2023, the Federal Reserve amended Reg II and
clarified that at least one debit network unaffiliated with the
front of card network must be enabled for CNP transactions (the
“2023 Amendment”). Id. ¶ 71 (referencing Debit Card Interchange
Fees and Routing, 87 Fed. Reg. 61217, 61230–32 (Oct. 11, 2022)
(codified at 12 C.F.R. § 235.7)). This clarification sought to
promote competition in e-commerce among debit networks. Id.
B. Visa Debit
Visa is thriving. See id. ¶ 63. In 2022, Visa produced
global operating incomes totaling $18.8 billion with an
5 Congress passed the Durbin Amendment in 2010 and it became law as
part of the Dodd-Frank Wall Street Reform and Consumer Protection Act,
Pub. L. No. 111-203 (2010). Compl. ¶ 8. The Durbin Amendment is
complementary to the federal antitrust laws. 12 U.S.C. § 5303.
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operating margin of 64% globally and an operating margin of 83%
in North America. Id. Central to this success, Visa debit in the
United States produces Visa’s largest source of revenue
globally. Id. ¶ 64. Each year, on its United States debit
volume, Visa charges over $7 billion in network fees and earns
over $5.6 billion in net revenue. Id.
For each debit transaction routed to Visa, the acquirer and
the issuer each pays a network fee to Visa. Id. ¶¶ 22, 43. The
acquirer also pays an interchange fee to the issuer. Id. ¶ 44.
Network fees for Visa debit vary based on the transaction type
but are generally lower for issuers than for acquirers, and in
most cases, significantly higher than those charged by the PIN
networks. Id. ¶¶ 43, 45, 68. In earning these network fees, Visa
incurs nearly zero incremental cost for each additional debit
transaction routed on the Visa network. Id. ¶ 65. Visa also
bears no financial risk for fraudulent debit transactions; the
merchant or the issuer bears that risk instead. Id.
In 2012, Visa also began charging each enrolled acquirer a
fixed monthly fee, called the “Fixed Acquirer Network Fee”
(“FANF”). Id. ¶ 43. Visa subsequently raised the FANF twice. Id.
¶ 87. Visa prices an acquirer’s FANF based on factors such as
the number of locations the merchant operates and the merchant’s
volume of CNP transactions. Id. ¶ 43.
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C. Alleged Market Definition
The markets alleged to be relevant are two product markets
in the United States: (1) the market for general purpose debit
network services and (2) the submarket for general purpose
card-not-present debit network services. Id. ¶¶ 149–51.
1. Alleged Product Market
The two-sided market for general purpose debit network
services allegedly includes “payment products and services” that
are accepted at numerous unrelated merchants and “that
facilitate the debit (i.e., withdrawal) of funds directly out of
a consumer’s bank account.” Id. ¶ 152. To be included, payment
networks must offer the four “minimum attributes of debit”:
(1) a rail that facilitates real-time transactions paid directly
from the consumer’s bank account; (2) the ability for the
consumer or the issuer to dispute and chargeback the
transaction; (3) payment guarantees for merchants; and (4) fraud
protections for all parties. Id. ¶¶ 152–53, 159. On that basis,
the alleged market for general purpose debit network services
includes both debit card networks and alternative debit
networks, such as fintech debit networks. See id. ¶¶ 152, 156.
Based, however, on the contention that market participants
view other payment methods as unsuitable substitutes for debit,
the following methods of payment are excluded:
General purpose credit card network services;
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Network services for store cards and other
prepaid cards;
Cash and check payments; and
Interbank payment networks.
Id. ¶¶ 155, 157–60.
Interbank payment networks are excluded because they
allegedly lack three out of the four minimum attributes of
debit: the ability for the consumer or the issuer to dispute and
chargeback the transaction; payment guarantees for merchants;
and fraud protections for all parties. Id. ¶¶ 153, 159. In
addition, ACH lacks real-time transaction rails, id. ¶ 115, and
RTP is available only for banks, see id. ¶ 61; The Clearing
House, RTP,
www.theclearinghouse.org/payment-systems/rtp/institution (last
visited June 18, 2025) (“RTP Website”).
2. CNP Submarket
The Government defines the market for general purpose
card-not-present debit network services as “a narrower relevant
product market included within the broader” product market that
primarily services e-commerce transactions. Id. ¶ 161. This “CNP
submarket” includes both debit card and fintech debit networks,
but again excludes interbank payment networks. See id. ¶ 162.
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C. Visa’s Alleged Monopoly Power
The Government alleges that Visa possesses monopoly power
in the market for general purpose debit network services and the
CNP submarket. Id. ¶¶ 164–65, 174–75. For purposes of this
motion, Visa does not contest that allegation.
Visa is the front of card brand for over 70% of debit card
payment volume. Id. ¶¶ 6, 53, 67, 179. Measured by the
percentage of all debit transactions, Visa enjoys a 60% market
share in the alleged market for general purpose debit network
services, and a 65% market share in the CNP submarket. Id.
¶¶ 6, 66, 164. In each alleged market, Mastercard has less than
25% market share, and no other competitor has more than a
single-digit percentage market share. See id. ¶¶ 103, 164. The
PIN networks collectively represent approximately 11% of all
debit transactions and only 5% of CNP debit transactions. Id.
¶ 103.
The below table summarizes these market share allegations:
Product Market Market Share CNP Submarket Market Share
Visa 60% Visa 65%
Mastercard 25% or less Mastercard 25% or less
Other Networks About 15% Other Networks About 15%
PIN Networks 11% PIN Networks 5%
See id. ¶¶ 6, 66, 103, 164.
Visa has retained these market shares allegedly despite
imposing new fees (like the FANF) and the promulgation of Reg
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II. Id. ¶¶ 167, 175. Although Visa’s share of debit payment
volume dropped from approximately 63% in 2011 to approximately
56% in 2012, the year when Reg II first took effect, Visa
regained the lost market share within a few years. Id. ¶¶ 95–96,
167. More recently, in October 2023, Visa converted previously
optional fees charged to acquirers for digital commerce services
into a mandatory bundled fee, allegedly without a corresponding
loss in debit volume. See id. ¶ 175.
Central to Visa’s alleged monopoly power, about 45% of Visa
CP transactions and an even higher share of Visa CNP
transactions cannot be routed to networks other than Visa and
are thus “non-contestable.” Id. ¶¶ 10, 58, 73, 79.
Non-contestable transactions exist because issuers have not
enabled PIN networks to process certain transaction types. See
id. ¶¶ 58, 92.
D. Visa’s Contracts
With this alleged monopoly power, Visa allegedly coerces
merchants, acquirers, and issuers to enter into exclusive
dealing contracts with Visa. These contracts, the Government
says, amount to de facto exclusive dealing arrangements that
violate Sherman Act §§ 1 and 2. Id. ¶¶ 181–92, 198–202.
1. Routing Contracts
Visa’s routing contracts with merchants and acquirers today
cover more than 180 of Visa’s largest merchants and acquirers,
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representing over 75% of Visa’s debit volume. Id. ¶¶ 13, 98.
Visa’s routing contracts require the merchant or acquirer to
route to Visa 90% to 100% of the merchant or acquirer’s eligible
debit transactions. Id. ¶¶ 12, 57, 70–76, 79, 87, 98. In some
cases, Visa also bargains for top position in the routing table,
a ranked list that determines which network a given debit
transaction should be routed to. Id. ¶ 76.
To induce merchant and acquirer enrollment, Visa allegedly
creates an incentive structure that shares Visa’s alleged
monopoly profits but punishes noncompliance. See id. ¶¶ 12, 74.
First, Visa charges artificially high rack rates and introduces
fixed fees like the FANF. See id. ¶¶ 12, 79–81, 87. Then, with
routing contracts, Visa offers relief: discounted rack rates and
fixed fee waivers. Id. ¶¶ 78–81, 87. In some cases, Visa adds
credit incentives. Id. ¶¶ 77, 85. But, while providing
concessions with one hand, Visa allegedly extracts the right to
punish noncompliance with the other. Id. ¶¶ 76–78. Pursuant to
Visa’s routing contracts, subject only to limited safe harbors,
any volume shortfall gives Visa the right to revert back to rack
rates for all transactions, both contestable and
non-contestable. Id. ¶¶ 76, 78. Additionally, in many cases, any
volume shortfall gives Visa the right to terminate early the
entire contract and claw back any incentives that Visa had
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previously paid, including any credit incentives provided under
the contract. Id. ¶ 77.
Because of this incentive structure, even some acquirer
processors that operate PIN networks have allegedly agreed to
routing deals with Visa. Id. ¶ 82. Those contracts allegedly
discourage acquirer processors from using PIN networks to
compete vigorously against Visa. Id.
Visa’s routing contracts with merchants and acquirers
allegedly foreclose from competition at least 45% of total debit
volume in the United States. Id. ¶ 98. In so doing, Visa’s
routing contracts allegedly limit routing choice and deprive
Visa’s competitors of scale. Id. ¶¶ 13, 45, 57–59, 77–78, 98.
2. Issuer Contracts
On the other side of the market, Visa enters into long-term
contracts with issuers that allegedly impose a variety of
restrictions on issuers. See id. ¶¶ 40, 88–94, 172.
With some issuer contracts, Visa places direct restrictions
on the placement and enablement of other debit card networks.
See id. ¶ 88. For example, Visa’s contract with JPMorgan Chase
allegedly permits Chase to enable only one unaffiliated PIN
network on 90% of Visa debit cards issued by Chase. Id.
With other issuer contracts, Visa allegedly achieves
similar results using volume targets. See id. ¶ 89. Included in
nearly 1,000 of Visa’s issuer contracts, volume targets offer
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incentives in exchange for the issuer’s commitment to grow the
issuer’s debit volume routed to Visa in line with Visa’s overall
debit growth in the United States. Id. Volume shortfalls,
however, require the issuer to pay significant monetary
penalties. Id. ¶¶ 90, 93. In some cases, noncompliant issuers
may owe Visa an early termination fee comprised of a
multimillion-dollar fixed fee plus a percentage of the benefits
the issuer has already earned. Id. ¶ 90. Debit volume targets
therefore incentivize issuers not to enable additional networks
on Visa debit cards and not to enable existing networks for
additional transaction types. Id. ¶ 91.
3. Alleged Exclusionary Effects
With issuer contracts on one side, and merchant and
acquirer contracts on the other, Visa allegedly foreclosed
competition in such a substantial share of the relevant market
so as to adversely affect competition. See id. ¶ 100. Reinforced
by indirect network effects, Visa’s unmatched scale and volume
of non-contestable transactions allegedly prevent any rival
debit network from competing to earn a meaningful market share.
Id. ¶¶ 98–104. Lack of acceptance and usage, in turn, allegedly
ensnare rival networks in a vicious cycle that prevents growth,
improvement of features, and ultimately, effective competition
with Visa. Id. ¶¶ 101, 105, 142.
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After the Durbin Amendment became law, smaller debit
networks allegedly attempted to outcompete Visa by offering
lower fees and improved features. Id. ¶ 104. But Visa’s
contracts allegedly foreclosed such competition by imposing
cliff pricing on merchants, acquirers, and issuers alike. Id.
¶¶ 76, 78, 81, 93. Under Visa’s alleged cliff pricing, Visa’s
prices increase dramatically when volume targets are not met,
namely, when transactions are routed to debit networks other
than Visa. Id.
To overcome Visa’s alleged cliff pricing and win
transactions away from Visa, it is not enough for a PIN network
to outcompete Visa on the price of per-transaction network fees.
See id. ¶¶ 83, 102. The PIN network must also compensate
merchants, acquirers, and issuers for the cost of Visa’s
imposing rack rates on non-contestable volume, as well as any
other incentive clawbacks. Id. Moreover, the resulting lack of
sufficient transaction data inhibits PIN networks from offering
robust fraud protections equivalent to or better than the
protections provided by Visa or Mastercard. Id. ¶ 105. Thus,
Visa’s contracts allegedly make it nearly impossible for PIN
networks to win market share away from Visa. Id. ¶¶ 103, 140.
Additionally, Visa’s contracts have allegedly thwarted the
intended effects of the Durbin Amendment and Reg II. See id.
¶¶ 95–96, 99, 167. For example, in 2023, Chase asked Visa for a
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contractual waiver to issue Visa debit cards with both Maestro
and Pulse enabled, as required to comply with the
2023 Amendment. Id. ¶ 107. Visa allegedly thought that granting
the waiver would increase competition for CNP volume. See id.
Taking stock, Visa granted Chase only a short-term waiver. Id.
But, with this leverage, Visa allegedly forced Chase to enter
into a Visa routing contract. Id.
This strategy was not limited to Chase; as alleged, Visa
also strategized to renew other issuer contracts and threatened
issuers with monetary penalties and price increases to
discourage PINless enablement. Id. ¶¶ 99, 173. With merchants
and acquirers, Visa allegedly strategized to secure more volume
under routing deals, and to discourage switching by including
early termination fees. Id. ¶ 99.
All told, by the end of 2022, at least 75% of Visa’s debit
volume (and 80% of its CNP debit volume) were allegedly
insulated from competition because of Visa’s contracts. Id.
¶ 141. That allegedly foreclosed from competition at least 45%
of all debit transactions and over 55% of CNP debit transactions
in the United States. Id. ¶¶ 19, 140–41.
E. Alleged Fintech Suppression
The Government also alleges that Visa partners with
competitors and potential competitors unlawfully to dissuade
competition. Id. ¶ 16. Using its alleged monopoly power, Visa
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allegedly offers customized incentives totaling up to hundreds
of millions of dollars annually to partners in exchange for
agreements not to develop a competing product and not to compete
in certain ways. Id. ¶¶ 21, 110–12, 135. In addition, Visa
allegedly obtains protections against disparagement,
discrimination, and disintermediation. Id. ¶ 112, 135. For these
reasons, the Government alleges that Visa’s contracts with
competitors and potential competitors “amount to a horizontal
product market division.” Id. ¶¶ 112, 135, 147.
1. Staged Digital Wallets
In forming partnerships to stymie threats to Visa debit,
Visa allegedly prioritized staged digital wallets. Id. ¶ 121.
Starting in around 2016, to prevent such wallets from competing,
Visa allegedly threatened to impose a staged digital wallet fee.
Id. ¶ 125. In response, all staged digital wallets signed deals
with Visa. Id. The alleged examples are PayPal and Square. Id.
¶¶ 119–32.
With PayPal, in 2016, Visa allegedly used the threat of
staged digital wallet fees and high rack rates to induce PayPal
to enter into an expansive Visa routing contract. Id. ¶¶ 119–22.
In around 2015, Visa allegedly also stymied PayPal’s entering
into partnerships with brick-and-mortar merchants by imposing a
restriction on ACH-funded transactions when the PayPal customer
had a Visa card in their PayPal wallet. See id. ¶ 123. Visa
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relaxed these restrictions in 2021, but allegedly required
information sharing to monitor PayPal’s product success. Id. In
2022, PayPal and Visa entered into a new ten-year contract that
allegedly limits PayPal’s incentives and ability to disrupt the
market for debit network services. Id. ¶ 124. To this day, Visa
allegedly restricts PayPal’s in-person ACH-funded transactions
to a QR-code model. Id. ¶ 123.
With Square, Visa allegedly entered into a series of
contracts that allegedly foreclosed Square from competing
aggressively against Visa and prevented Square from developing a
fintech debit network. See id. ¶¶ 126–32. When Visa first
entered into a contract with Square in 2014, Visa allegedly
insisted on the right to terminate for convenience to punish any
efforts to compete with Visa. See id. ¶¶ 127–29. In 2016, Visa
allegedly threatened termination to prevent Square from
launching a new product that would enable users to store
preloaded funds. See id. ¶¶ 130–31. More recently, when Square
launched Cash App Pay, a consumer-to-merchant payment service,
Visa allegedly used the threat of staged digital wallet fees to
coerce Square: to route 97% of Cash App Pay transactions to
Visa; to preference Visa in signup flow and default settings;
and not to steer customers to ACH. Id. ¶ 132.
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2. Other Fintech Firms
Using incentive-laden contracts, Visa allegedly also guards
against disintermediation by other fintech firms. Id. ¶¶ 112,
133, 135. By forming custom partnerships and entering into
routing contracts with Big Tech companies like Amazon and Apple,
Visa allegedly extracts non-disintermediation and other future
commitments from some of Visa’s largest merchants. Id. ¶ 135.
Visa also benefits by allegedly obtaining control over
e-commerce acceptance and online payments flow in the partners’
systems. Id. ¶ 134.
Apple is the alleged example. Id. ¶ 118. In response to
Apple’s threat, Visa allegedly entered into deals whereby Apple
agreed: not to develop or deploy payment functionality with the
aim of competing with Visa; not to build, support, or introduce
payment technologies that disintermediate Visa; not to provide
incentives “with the intent of disintermediating Visa or
inciting customers to cease using Visa Cards”; and not to steer
customers to third-party payment methods such as ACH.
Id. ¶ 136. In exchange, Visa allegedly provided Apple with
reduced merchant fees and payments that, in 2023, totaled
hundreds of millions of dollars. Id.
F. Effects on Competition
The Government alleges that, by engaging in the conduct
described above, Visa harmed competition and innovation in the
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United States market for general purpose debit network services
and the CNP submarket. Id. ¶¶ 138–46. The Government also
alleges that Visa’s alleged conduct produces no procompetitive
benefits that outweigh the anticompetitive effects or that
cannot be obtained through less restrictive means. Id. ¶ 147.
The Government further contends that Visa’s agreements with
current and potential competitors are not ancillary to the
contracting parties’ vertical relationship, but rather, simply
divide up the relevant product markets. Id.
III. Legal Standard
A. Sherman Act § 1
Section 1 of the Sherman Act forbids “[e]very contract
. . . in restraint of trade or commerce among the several
States.” 15 U.S.C. § 1. Despite this broad language, § 1 “was
intended to prohibit only unreasonable restraints of trade.”
Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of
Okla., 468 U.S. 85, 98 (1984). Therefore, “[t]o prove a § 1
violation, a plaintiff must demonstrate: (1) a combination or
some form of concerted action between at least two legally
distinct economic entities that (2) unreasonably restrains
trade.” Geneva Pharms. Tech. Corp. v. Barr Labs. Inc., 386 F.3d
485, 506 (2d Cir. 2004). “The overarching standard is whether
[the] defendant[’s] actions diminish overall competition, and
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hence consumer welfare.” K.M.B. Warehouse Distribs., Inc. v.
Walker Mfg. Co., 61 F.3d 123, 127 (2d Cir. 1995).
“Some restraints are per se unreasonable”—that is, “under
no circumstance will they be held to be lawful.” U.S. Airways,
Inc. v. Sabre Holdings Corp., 938 F.3d 43, 54 (2d Cir. 2019).
“If a restraint is not per se unreasonable, it is analyzed under
the rule of reason” to determine whether the procompetitive
effects outweigh the anticompetitive effects. See id. at 55.
B. Sherman Act § 2
Section 2 of the Sherman Act makes it unlawful for a person
to “monopolize” or “attempt to monopolize” interstate trade or
commerce. 15 U.S.C. § 2. Under § 2, monopoly power means “the
power to control prices or exclude competition.” United States
v. E.I. du Pont De Nemours & Co., 351 U.S. 377, 391 (1956).
To establish monopolization in violation of § 2, the
plaintiff must prove that “the defendant: (1) possessed monopoly
power in the relevant market; and (2) willfully acquired or
maintained that power.” Tops Mkts., Inc. v. Quality Mkts., Inc.,
142 F.3d 90, 97 (2d Cir. 1998) (citing United States v. Grinnell
Corp., 384 U.S. 563, 570–71 (1966)). Hence, § 2 does not outlaw
the acquisition of monopoly power through “growth or development
as a consequence of a superior product, business acumen, or
historic accident.” Grinnell Corp., 384 U.S. at 570–71. To be
found unlawful, “the possession of monopoly power” must be
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“accompanied by an element of anticompetitive conduct.” Verizon
Commc’ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540 U.S.
398, 407 (2004).
To establish attempted monopolization in violation of § 2,
the plaintiff must show that the defendant: “(1) engaged in
predatory or anticompetitive conduct with (2) a specific intent
to monopolize and (3) a dangerous probability of achieving
monopoly power.” Spectrum Sports Inc. v. McQuillan, 506 U.S.
447, 456 (1993).
Under § 2, courts must avoid “tightly compartmentalizing
the various factual components” of the plaintiff’s claims and
“wiping the slate clean after scrutiny of each.” City of Groton
v. Conn. Light & Power Co., 662 F.2d 921, 928–29 (2d Cir. 1981)
(quoting Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370
U.S. 690, 699 (1962)). When aggregated, however, independently
lawful acts rarely cause harm to competition. See Pac. Bell Tel.
Co. v. Linkline Commc’ns, Inc., 555 U.S. 438, 457 (2009).
Therefore, the proper inquiry is not whether “there is a
fraction of validity to each of [the plaintiff’s] claims.” City
of Groton, 662 F.3d at 928–29. “The proper inquiry is whether,
qualitatively, there is a synergistic effect.” Id.
B. Rule 12(b)(6)
In deciding a Rule 12(b)(6) motion to dismiss for failure
to state a claim, the Court must accept the allegations in the
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complaint as true and draw all reasonable inferences in the
plaintiff’s favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d
184, 191 (2d Cir. 2007). The Court’s function on a motion to
dismiss is “not to weigh the evidence that might be presented at
a trial but merely to determine whether the complaint itself is
legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d
Cir. 1985).
To survive a motion to dismiss, the complaint must contain
“enough facts to state a claim to relief that is plausible on
its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
In particular, a claim brought under the Sherman Act must
plausibly (1) define the relevant market and (2) allege conduct
in violation of the antitrust laws (3) that harmed competition.
See United States v. Microsoft Corp., 253 F.3d 34, 58–59 (D.C.
Cir. 2001) (en banc) (per curiam); Concord Assocs., L.P. v. Ent.
Props. Tr., 817 F.3d 46, 52 (2d Cir. 2016). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). While the Court should construe
the factual allegations in the light most favorable to the
plaintiff, “the tenet that a court must accept as true all of
the allegations contained in a complaint is inapplicable to
legal conclusions.” Id.
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When presented with a motion to dismiss pursuant to Rule
12(b)(6), the Court may consider documents that are referenced
in the complaint, documents that the plaintiff relied on in
bringing suit and that are either in the plaintiff’s possession
or that the plaintiff knew of when bringing suit, or matters of
which judicial notice may be taken. See Chambers v. Time Warner,
Inc., 282 F.3d 147, 153 (2d Cir. 2002).
IV. Discussion
Visa’s three arguments for dismissal are addressed in turn.
A. Market Definition
Visa argues initially that the Government’s alleged product
market is implausible because it excludes interbank payment
networks such as ACH and RTP. Mem. of Law in Support (“Br.”) at
12–17, ECF No. 39; Visa’s Reply (“Rep.”) at 1–3, ECF No. 60. But
the Government has alleged several characteristics that
plausibly restrict the reasonable interchangeability of use
between debit networks and interbank payment networks, and thus
a plausible product market.
“To state a claim under either [§] 1 or [§] 2 of the
Sherman Act, a plaintiff must plausibly allege that the
defendant[’s] anticompetitive conduct restricted competition
within a relevant market.” See Regeneron Pharms., Inc. v.
Novartis Pharma AG, 96 F.4th 327, 338 (2d Cir. 2024). “For
antitrust purposes, the concept of a market has two components:
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a product market and a geographic market.” Concord Assocs., 817
F.3d at 52. Visa’s motion to dismiss challenges only the
Government’s proposed product market.
The relevant product market includes “all products
reasonably interchangeable by consumers for the same purposes.”
United States v. Am. Express Co., 838 F.3d 179, 196 (2d Cir.
2016), aff’d sub nom. Ohio v. Am. Express Co., 585 U.S. at 540.
At the pleadings stage, the alleged product market must “bear a
rational relation to the methodology courts prescribe to define
a market” and include a “plausible explanation as to why a
market should be limited” to exclude possible substitutes. Todd
v. Exxon Corp., 275 F.3d 191, 200 (2d Cir. 2001).
To discern the boundaries of the relevant product market,
courts look to “the reasonable interchangeability of use or the
cross-elasticity of demand between the product itself and
substitutes for it.” Brown Shoe Co. v. United States, 370 U.S.
294, 325 (1962). “Two products are reasonably interchangeable
where there is sufficient cross-elasticity of demand—that is,
where consumers would respond to a slight increase in the price
of one product by switching to another product.” Regeneron, 96
F.4th at 339; see also du Pont, 351 U.S. at 394–95.
“This is a relatively permissive pleading standard.”
Regeneron, 96 F.4th at 339. Courts should therefore “hesitate to
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grant motions to dismiss for failure to plead a relevant product
market.” Todd, 275 F.3d at 199–200.
1. Reasonable Interchangeability
Visa argues that the alleged product market is implausible
because the excluded interbank payment networks perform the same
core function as the included debit networks: transferring funds
between bank accounts. But Visa places “improper weight on the
functional, rather than economic, similarities between”
interbank payment networks and debit networks. See Regeneron, 96
F.4th at 338–40. Moreover, Visa improperly devalues the
allegation that interbank payment networks lack at least three
out of the four alleged minimum characteristics of debit. See
Compl. ¶ 159. Evaluated under the established legal frameworks
for defining the relevant product market, the complaint alleges
plausibly that debit networks and interbank payment networks
“are not economic substitutes.” See Regeneron, 96 F.4th at 340.
(a) Hypothetical Monopolist Test
To define the relevant market, courts often apply the
“hypothetical monopolist test.” Am. Express Co., 838 F.3d at
198. The test “imagin[es] that a hypothetical monopolist has
imposed a small but significant non-transitory increase in price
(‘SSNIP’) within the proposed market.” Id. “If the hypothetical
monopolist can impose a SSNIP without losing so many sales to
other products as to render the SSNIP unprofitable, then the
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proposed market is the relevant market.” Regeneron, 96 F.4th at
339. But “if consumers are able and inclined to switch away from
the products in the proposed market in sufficiently high numbers
to render the SSNIP unprofitable, then the proposed market
definition is likely too narrow and should be expanded.” Am.
Express Co., 838 F.3d at 199. Additionally, courts considering
“a two-sided market must consider the feedback effects inherent
on the platform.” See id. at 200.
In this case, the complaint alleges plausibly that a
hypothetical monopolist could impose a profitable SSNIP in the
proposed product market. This is because demand is plausibly
alleged to be bilaterally inelastic. See Compl. ¶ 155. On the
cardholder side, tens of millions of Americans allegedly prefer
or must rely on debit. Id. ¶¶ 27, 157, 160. Some consumers, for
example, prefer the spending discipline of using only available
funds; others are unable to obtain credit. Id. That creates
inelastic merchant demand because merchants “do not want to risk
lost sales by not accepting many consumers’ preferred payment
method.” Id. ¶ 155; see also Am. Express Co., 838 F.3d at 197–98
(emphasizing the interdependence between the two sides of a card
payments network). And in debit, where merchants go, acquirers
must follow. See Compl. ¶ 155.
Moreover, it is plausible that the four alleged minimum
attributes of debit sufficiently restrict the cross-elasticity
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of demand between debit networks and other payment networks such
that a hypothetical monopolist could impose a profitable SSNIP
on general purpose debit network services. Id. ¶¶ 155, 157–60.
The complaint alleges specifically that no other type of payment
network offers all four of the minimum attributes of debit: (1)
real-time transaction rails; (2) dispute and chargeback
capabilities; (3) merchant payment guarantees; and (4) fraud
protections. Id. ¶¶ 152–53, 157–60. In particular, the real-time
interbank payment networks lack (2), (3), and (4), and ACH lacks
all four. Id. ¶¶ 152–53, 155, 159. In addition, RTP is alleged
to be available only for banks. See id. ¶ 61; RTP Website.
In response to a SSNIP, consumers might continue to use
debit networks over interbank payment networks because consumers
are reluctant to give up the ability to charge back fraudulent
or defective purchases. Id. ¶ 159. The same may be true of fraud
protections. Id. Consumers may also be averse to the additional
frictions associated with interbank payment networks (like ACH’s
account verification and slower processing speed). Id. RTP is
allegedly not even available to consumers. See id. ¶ 61; RTP
Website.
Likewise, in response to a SSNIP, merchants and acquirers
might continue to use debit networks over interbank payment
networks because of inelastic consumer demand for debit. Id.
¶¶ 155, 159. Moreover, lack of fraud detection and merchant
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payment guarantees could increase costs related to fraud and
nonpayment; those increased costs might sufficiently offset
savings recouped from interbank payment networks’ lower fees so
as to make switching undesirable. See id.
Although both debit networks and real-time interbank
payment networks offer real-time transaction rails, that “does
not automatically mean that [the products] compete in the same
market.” See Regeneron, 96 F.4th at 340. Somewhere across the
spectrum of function and price, products divide into separate
product markets. See id. at 339–40 (finding plausible the
allegation that vials and prefilled syringes “contain[ing] the
same medicines” competed in different product markets); Fed.
Trade Comm’n (“FTC”) v. Tapestry, Inc., 755 F. Supp. 3d 386, 416
(S.D.N.Y. 2024) (collecting cases). Moreover, given other
economic factors, even functionally identical products—like
brand-name and generic versions of the same drug—can sort into
different product markets. Geneva Pharms., 386 F.3d at 496–97.
Because the complaint in this case alleges plausibly and with
specificity that functional differences between debit networks
and interbank payment networks are features that delineate the
relevant product market, the Government has alleged a plausible
product market.6
6 In arguing to the contrary, Visa relies on inapposite cases. See, e.g.,
Jacobs v. Tempur-Pedic Int’l Inc., 626 F.3d 1327, 1338 (11th Cir. 2010)
(finding that “skimpy allegations” failed to define a plausible product
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At bottom, what matters is “reasonable interchangeability
in the eyes of consumers.” United States v. Visa U.S.A., Inc.,
163 F. Supp. 2d 322, 335 (S.D.N.Y. 2001), aff’d, 344 F.3d at
244. And the complaint explains plausibly that, in response to a
SSNIP on general purpose debit network services, consumers,
merchants, and banks would continue to use debit networks rather
than to substitute interbank payment networks, despite their
limited “real-world functional similarities.” See Regeneron, 96
F.4th at 339–40. The complaint therefore alleges plausibly that
the market for general purpose debit network services is the
relevant product market. See id.
(b) Practical Indicia
To define the relevant product market, courts also “look to
practical indicia of market boundaries to identify whether two
products are economic substitutes.” Id. at 339. These so-called
Brown Shoe factors “can include ‘industry or public recognition
of the market as a separate economic entity, the product’s
peculiar characteristics and uses, unique production facilities,
distinct customers, distinct prices, sensitivity to price
changes, and specialized vendors.’” Id. (quoting Brown Shoe, 370
U.S. at 325 & collecting cases). “This list is neither mandatory
market); Hicks v. PGA Tour, Inc., 897 F.3d 1109, 1121–22 (9th Cir. 2018)
(rejecting proposed submarkets that “omit[ted] many economic substitutes”);
Glob. Disc. Travel Servs., LLC v. Trans World Airlines, Inc., 960 F. Supp.
701, 706 (S.D.N.Y. 1997) (declining to accept “a relevant product market in a
single brand product”).
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nor exhaustive.” Alaska Elec. Pension Fund v. Bank of Am. Corp.,
306 F. Supp. 3d 610, 620 (S.D.N.Y. 2018).
In this case, the practical indicia bolster the
plausibility of the Government’s proposed market. In particular,
“industry or public recognition” of the debit market “as a
separate economic entity” provides strong support. See Brown
Shoe, 370 U.S. at 325. Industry recognition is significant
because “economic actors usually have accurate perceptions of
economic realities.” Todd, 275 F.3d at 205.
Visa’s own documents indicate that the payment networks
industry distinguishes between debit and other methods of
payment. See Br., Ex. 3 at 5, ECF No. 39-3; see also United
States v. Google LLC, 747 F. Supp. 3d 1, 113 (D.D.C. 2024)
(“Google itself recognizes general search services as a distinct
product and separate market.”). Similarly, the providers of RTP
and FedNow describe their real-time interbank payment networks
not as substitutes for debit networks, but rather, as a tool
that financial institutions can use to build debit networks. See
RTP Website; The Federal Reserve, About the FedNow® Service,
www.frbservices.org/financial-services/fednow/about.html (last
visited June 18, 2025).
Other practical indicia also support the Government’s
proposed market definition. See Regeneron, 96 F.4th at 339.
Debit is alleged to have peculiar characteristics–the four
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minimum attributes of debit—that distinguish debit networks from
other payment services. Compl. ¶¶ 152–53. Debit networks are
also alleged to have distinct customers, including, on the
cardholder side, consumers that are ineligible for credit. Id.
¶ 27. In addition, debit networks allegedly set distinct prices
by charging network fees, imposing fixed fees on merchants and
acquirers, and setting interchange fees for unregulated issuers.
Id. ¶¶ 43–44; see also FTC v. Meta Platforms, Inc., 654 F. Supp.
3d 892, 918–19 (N.D. Cal. 2023) (weighing a distinct pricing
model in favor of the existence of an antitrust market).
Moreover, the complaint alleges that whereas debit networks
process a variety of transactions at “numerous, unrelated
merchants,” interbank debit networks primarily process
“recurring fixed payments like mortgage and tuition payments.”
Compl. ¶¶ 152, 159.
Taken together, the practical indicia alleged in or
referenced by the complaint suggest plausibly that debit
networks are a distinct type of payment service. Accordingly,
the complaint alleges plausibly that debit networks and
interbank payment networks “are not economic substitutes.” See
Regeneron, 96 F.4th at 341.
2. Visa’s Counterarguments
Visa sees a logical inconsistency in the allegation that
fintech debit networks compete with Visa debit, whereas
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interbank payment networks, which fintech debit networks use to
transfer funds, do not. This argument, however, misapprehends
the relevant allegations. The complaint alleges that fintech
debit networks use interbank payment networks as “lower-cost
alternatives to Visa’s debit offering” when transferring funds
between banks. Compl. ¶ 61. That only strengthens the
complaint’s allegation that the end users of debit network
services—consumers and merchants—view as reasonable substitutes
for Visa only those networks, like fintech debit networks, that
provide “the same functionality to consumers and merchants.” See
id. ¶¶ 60–61, 156. Interbank payment networks do not provide the
same functionality as Visa debit because even real-time
interbank payment networks lack three out of the four alleged
minimum attributes of debit. Id. ¶¶ 152–53, 159. Visa’s
counterarguments are therefore without merit.
In sum, the Government has alleged a plausible product
market. See Regeneron, 96 F.4th at 339–40. “Market definition is
a deeply fact-intensive inquiry” that “generally requires
discovery,” Todd, 275 F.3d at 199–200, and this case is not an
exception. Accordingly, Visa’s motion to dismiss for failure to
allege a plausible product market is denied.7
7 Because Visa does not separately challenge the plausibility of the
proposed CNP submarket, the complaint’s allegations regarding the CNP
submarket likewise survive Visa’s motion to dismiss.
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B. Exclusive Dealing Contracts
Visa’s second argument is that the complaint fails to
allege anticompetitive conduct and thus harm to competition
because the complaint does not allege that Visa discounted its
prices for Visa debit to below its costs. Br. at 17–20; Rep. at
4–7, 10–11. Advocating for a rule of per se legality, Visa
contends that the price–cost test “require[s] the Government to
allege that Visa has set prices below its costs, full stop.” Br.
at 18.
But that argument overlooks all of the other
anticompetitive conduct alleged in the complaint. Moreover,
Visa’s argument misconstrues the gravamen of the complaint. The
Government does not allege that Visa violated the Sherman Act by
setting prices too low, namely, by using predatory volume
discounts; quite to the contrary, the Government contends that
Visa’s contracts deprived rivals of their ability to compete and
thus allowed Visa to charge supracompetitive prices. Gov’t’s
Opposition (“Opp.”) at 14, ECF No. 52.
Those allegations show plausibly that the legality of
Visa’s alleged conduct should be evaluated “under the rule of
reason to determine whether the ‘probable effect’ of such
conduct was to substantially lessen competition,” rather than
merely disadvantage rivals. See ZF Meritor, LLC v. Eaton Corp.,
696 F.3d 254, 269 (3d Cir. 2012) (quoting Tampa Elec. Co. v.
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Nash. Coal Co., 365 U.S. 320, 328–29 (1961)); Microsoft, 253
F.3d at 69. At this stage, “[t]he price-cost test is not
dispositive” because the complaint “do[es] not allege that price
itself functioned as the exclusionary tool.” See ZF Meritor, 696
F.3d at 269, 281.
1. Exclusive Dealing
Under an exclusive dealing agreement, the buyer agrees to
purchase specific goods or services only from the seller for a
set period of time. Id. at 270. “The primary antitrust concern
with exclusive dealing arrangements is that they may be used by
a monopolist to strengthen its position, which may ultimately
harm competition.” Id. (citing United States v. Dentsply Int’l,
Inc., 339 F.3d 181, 191 (3d Cir. 2005)). Such conduct can
deprive “rivals of the opportunity to achieve the minimum
economies of scale necessary to compete.” Id. at 271.
Because courts look to the actual effects of exclusive
dealing arrangements, the federal antitrust statutes recognize
“de facto exclusive dealing claims.” See id. at 270 (Sherman Act
§§ 1 & 2, Clayton Act § 3); Tampa Elec., 365 U.S. at 326–27
(Clayton Act § 3).8 Recognizing that exclusive dealing agreements
are vertical agreements that can produce many procompetitive
8 But see Virgin Atl. Airways Ltd. v. British Airways PLC, 257 F.3d
256, 264 (2d Cir. 2001) (reserving judgment on “whether a § 2 analysis
may be neatly imported into a relevant § 1 analysis”).
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benefits, courts evaluate their legality under the rule of
reason. ZF Meritor, 696 F.3d at 271; CDC Techs., Inc. v. IDEXX
Labs., Inc., 186 F.3d 74, 80 (2d Cir. 1999); Roland Mach. Co. v.
Dresser Indus., Inc., 749 F.2d 380, 393–94 (7th Cir. 1984).
To be held unlawful under the rule of reason, an exclusive
dealing arrangement must “foreclose competition in such a
substantial share of the relevant market so as to adversely
affect competition.” ZF Meritor, 696 F.3d at 271; Microsoft, 253
F.3d at 69–70. Courts “also analyze the likely or actual
anticompetitive effects of the exclusive dealing arrangement,
including whether there was reduced output, increased price, or
reduced quality in goods or services.” Eisai, Inc. v. Sanofi
Aventis U.S., LLC, 821 F.3d 394, 403 (3d Cir. 2016); see also
MacDermid Printing Sols. LLC v. Cortron Corp., 833 F.3d 172, 183
(2d Cir. 2016) (generally requiring “evidence of changed prices,
output, or quality”). But there is no set formula, and courts
must “look at the practical effect of [the] exclusive dealing
arrangements” in any given case. McWane, Inc. v. FTC, 783 F.3d
814, 834 (11th Cir. 2015).
2. The Price-Cost Test
The price-cost test shields genuine price discounts from
claims of predatory pricing. Brooke Grp. Ltd. v. Brown &
Williamson Tobacco Corp., 509 U.S. 209, 222–24 (1993). When the
price-cost test applies, the plaintiff must prove that the
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defendant’s prices “are below an appropriate measure of [the
defendant’s] costs.” Id. at 222.
To avoid chilling procompetitive conduct, courts apply the
price-cost test not only to predatory pricing claims, but also
to claims alleging that the defendant’s actions directed at
price itself excluded rivals from the relevant market. See
Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc., 549
U.S. 312, 325 (2007) (alleged predatory bidding); linkLine
Commc’ns, 555 U.S. at 451–54 (alleged price squeeze). Doing so
recognizes that “cutting prices in order to increase business
often is the very essence of competition,” see Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986), and
that “[l]ow prices benefit consumers regardless of how those
prices are set,” see Atl. Richfield Co. v. USA Petrol. Co., 495
U.S. 328, 340 (1990).
3. Exclusive Dealing and Price
Discounts conditioned on exclusivity have required courts
to “grapple[] with the question of when to apply the price-cost
test.” FTC v. Syngenta Crop Prot. AG, 711 F. Supp. 3d 545, 572–
76 (M.D.N.C. 2024) (surveying the case law). In ZF Meritor, the
Court of Appeals for the Third Circuit “balance[d] the important
concerns the Supreme Court has identified in over-regulating
price-cutting schema, and under-regulating exclusive dealing.”
Id. at 575. The court concluded that “exclusive dealing
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arrangements can exclude equally efficient (or potentially
equally efficient) rivals, and thereby harm competition,
irrespective of below-cost pricing.” ZF Meritor, 696 F.3d at
281. But the court further held that “the price-cost test may be
utilized as a specific application of the rule of reason” in
exclusive dealing cases. Id. at 273 (citing Concord Boat Corp.
v. Brunswick Corp., 207 F.3d 1039, 1060–63 (8th Cir. 2000)).
Doing so is appropriate, the court determined, when “price is
the clearly predominant mechanism of exclusion.” Id. at 275.
Conversely, when the defendant’s alleged practices include one
or more significant non-price elements of exclusion, the
price-cost test’s safe harbor need not apply. See id. at 279–81.
After ZF Meritor was issued, other circuit courts of appeal
have cited the decision favorably.9 Moreover, numerous district
courts have expressly applied the “the clearly predominant
mechanism of exclusion” standard.10 In this case, the parties
both cite ZF Meritor favorably and appear to agree that the ZF
9 See In re EpiPen (Epinephrine Injection, USP) Antitrust Litig., 545
F. Supp. 3d 922, 1016–17 (D. Kan. 2021), aff’d, 44 F.4th 959, 987–88
(10th Cir. 2022) (approving of the district court’s application of the
ZF Meritor standard in a multi-district litigation transferred from
the Third Circuit); McWane, 783 F.3d at 834–35 (following ZF Meritor
and applying the rule of reason to de facto exclusive dealing
arrangements).
10 See, e.g., Syngenta, 711 F. Supp. 3d at 575; In re Surescripts
Antitrust Litig., 608 F. Supp. 3d 629, 642 (N.D. Ill. 2022); In re
EpiPen, 545 F. Supp. 3d at 1016–17; In re Remicade Antitrust Litig.,
345 F. Supp. 3d 566, 577–80 (E.D. Pa. 2018); Dial Corp. v. News Corp.,
165 F. Supp. 3d 25, 32 (S.D.N.Y. 2016).
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Meritor standard strikes an appropriate balance between the
price-cost test and the rule of reason applicable to exclusive
dealing claims. Br. 20; Opp. 14–15. The Court therefore
considers whether price is alleged to be the clearly predominant
mechanism of exclusion.
4. Sufficiency of Allegations
Under the ZF Meritor standard, the Government has alleged a
plausible exclusive dealing claim under Sherman Act §§ 1 and 2.
To prevail on an exclusive dealing claim brought under § 1, the
plaintiff must show that the defendant’s practices amounted to
exclusive dealing arrangements that “foreclose[d] competition in
such a substantial share of the relevant market so as to
adversely affect competition.” ZF Meritor, 696 F.3d at 271
(citing Tampa Elec., 365 U.S. at 328). Exclusive dealing
arrangements also violate § 2 when the overall practice
constitutes “willful acquisition or maintenance of [monopoly]
power.” Dial Corp., 165 F. Supp. 3d at 34, 36–37. At the
pleadings stage, the defendant’s anticompetitive conduct and
resulting harm to competition must be plausibly alleged. See
Twombly, 550 U.S. at 570.
In assessing whether the defendant’s actions substantially
foreclosed competition, courts consider the following factors:
(1) significant market power by the defendant; (2) substantial
foreclosure; (3) contracts of sufficient duration to prevent
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meaningful competition by rivals; (4) likely or actual
anticompetitive effects considered in light of any
procompetitive effects; (5) whether there is evidence that the
dominant firm engaged in coercive behavior; (6) the ability of
customers to terminate the agreements; and (7) the use of
exclusive dealing by the defendant’s competitors. ZF Meritor,
696 F.3d at 271–72 (collecting cases). For purposes of this
motion, relying solely on the price-cost test, Visa contests
only the fourth factor: likely or actual anticompetitive
effects. Thus, to survive Visa’s motion to dismiss, the
complaint must allege plausibly that Visa’s contracts excluded
rivals from the relevant market through one or more significant
non-price mechanisms. See id. at 275; Syngenta, 711 F. Supp. 3d
at 576.
The complaint makes such allegations. The thrust of the
complaint is that Visa’s loyalty scheme, unfurled through Visa’s
contracts on both sides of the relevant market, unreasonably
restrained competition and grew or maintained Visa’s monopoly in
debit by excluding rivals through mechanisms linked only
indirectly to price. Recognizing its monopoly power and leverage
over non-contestable transactions in particular, Visa allegedly
increased its rack rates and introduced new fixed fees.11 See
11The mere existence of non-contestable volume may be the product of
“growth or development as a consequence of a superior product.”
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Compl. ¶¶ 12, 22, 76–87, 102. Additionally, to grow its
non-contestable debit volume, Visa allegedly induced and
threatened issuers like Chase to disable PIN networks. See id.
¶¶ 88–94, 99, 107, 173. Visa then allegedly used its dominant
position and artificial incentive structure to coerce customers
into exclusive dealing contracts. See id. ¶¶ 198–202; Dentsply,
399 F.3d at 184 (explaining that, “if faced with an ‘all or
nothing’ choice,” customers “may accede to the dominant firm’s
wish for exclusive dealing”). These “long-term” contracts
included cliff pricing, clawback provisions, and other penalties
that, in effect, took away the ability of customers to terminate
the agreements. See Compl. ¶¶ 40, 75–79, 90–93; In re
Surescripts, 608 F. Supp. 3d at 646 (explaining that clawback
provisions can “greatly amplif[y] the [loyalty] scheme’s
exclusionary effect”).
All told, Visa’s loyalty program allegedly foreclosed from
competition at least 45% of all debit transactions and over 55%
of CNP debit transactions in the United States—an amount of
foreclosure sufficient to violate the Sherman Act. See Compl.
¶¶ 19, 140–41; Microsoft, 253 F.3d at 70. Visa’s contracts
Grinnell Corp., 384 U.S. at 571. But monopoly power, even when
lawfully obtained, may not be wielded to exclude competitors in ways
that have the probable effect of harming the competitive process. See
Dentsply, 399 F.3d at 196; Syngenta, 711 F. Supp. 3d at 576–77. That
general rule is especially important when the defendant “has no true
competitor.” See Google, 747 F. Supp. 3d at 144.
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allegedly also heightened barriers to entry in a two-sided
market naturally insulated from competition. See Compl. ¶¶ 5,
55, 154; In re Surescripts, 608 F. Supp. 3d at 645 (recognizing
that “[a]chieving critical mass” presents “a barrier to entry
for start-ups in many two-sided markets”); see also Syngenta,
711 F. Supp. 3d at 576–77 (applying the rule of reason where the
alleged monopolists “exacerbate[d] the already high” entry
costs). Such effects, in turn, allegedly prevented PIN networks
from gaining the scale necessary to improve features like fraud
protection, which could lead to increased enablement of PIN
networks and thus competition for debit transactions. See Compl.
¶¶ 101, 105. In sum, the crux of the complaint is not that Visa
used volume discounts to harm rivals, but rather, that Visa used
its dominant position in the relevant market to coerce customers
into exclusive dealing contracts that prevented rivals from
having a chance to compete with Visa.
In this case, the complaint alleges plausibly that Visa’s
loyalty program prevented Visa’s customers from routing to PIN
networks even when PIN networks offered lower per-transaction
prices than Visa. See Compl. ¶¶ 80–83. In that way, this case is
distinguishable from cases where the defendants merely offered
discounts that encouraged volume shopping but did not prevent
customers from buying from or switching to rival suppliers when
those suppliers “offer[ed] better prices.” Cf., e.g., Concord
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Boat, 207 F.3d at 1059; Eisai, 821 F.3d at 400, 406; Allied
Orthopedic Appliances Inc. v. Tyco Health Care Grp. LP, 592 F.3d
991, 997 (9th Cir. 2010).
The complaint also alleges plausibly that Visa
substantially foreclosed the relevant market from competition
from the other front of card networks. Exclusive dealing
arrangements of short duration and easy terminability tend not
to violate the antitrust laws. See CDC Techs., 186 F.3d at 81;
Omega Envt’l., Inc. v. Gilbarco, Inc., 127 F.3d 1157, 1163 (9th
Cir. 1997); Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d
227, 237 (1st Cir. 1983); see also Menasha Corp. v. News Am.
Mktg. In-Store, Inc., 354 F.3d 661, 663 (7th Cir. 2004)
(recognizing that “competition for the contract is a vital form
of rivalry”). But long-term exclusive dealing arrangements,
especially those that are difficult to terminate, have the
potential to frustrate competition even from equally efficient
or more efficient suppliers. See ZF Meritor, 696 F.3d at 265,
277 (monopolist’s market-share contracts lasting at least five
years with every direct purchaser in the relevant market); Duke
Energy Carolinas, LLC v. NTE Carolinas II, LLC, 111 F.4th 337,
357 (4th Cir. 2024) (long-term contracts gave incumbent
monopolist the power to offer “blend-and-extend” discount that a
more efficient upstart could not match). In this case, not only
are Visa’s contracts alleged to be long-term contracts, Compl.
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¶¶ 40, 99, 172, but moreover, the two-sidedness of the relevant
market amplifies their alleged exclusionary effect. See In re
Surescripts, 608 F. Supp. 3d. 645–47; FTC v. Surescripts, LLC,
424 F. Supp. 3d 92, 103–04 (D.D.C. 2020). Any particular
merchant and its acquirer cannot easily leave Visa altogether
for another front of card network because consumers will
continue to seek to use Visa debit cards at the merchant. See
Compl. ¶¶ 170–71. In other words, “losing [Visa] as a supplier
[is] not an option.” See ZF Meritor, 696 F.3d at 278. On the
other side, switching costs allegedly prevent issuers from
switching easily to other front of card networks like
Mastercard, and Reg II allegedly prevents rival networks from
using interchange fees to compensate regulated issuers’
switching costs. Compl. ¶¶ 52, 172. Taken together, the length
of Visa’s contracts, the market’s structure, and Visa’s dominant
position in the market suggest plausibly that even other front
of card networks are excluded from competition through
significant mechanisms other than price. See ZF Meritor, 696
F.3d at 277; Dentsply, 399 F.3d at 193–96; Dial Corp., 165 F.
Supp. 3d at 33.
Indeed, the complaint alleges that there has been “paltry
penetration in the market by competitors over the years.” See
Dentsply, 399 F.3d at 194. This has allegedly transpired despite
Visa’s high rack rates and introduction of new fixed fees—market
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features that would normally invite competition and entry. See
Compl. ¶¶ 79, 87. But despite the efforts of Visa’s rivals to
compete on price and features, Visa’s exclusive dealing
contracts allegedly foreclosed competition before competition
could even take place. See id. ¶¶ 19, 104, 140–41.12 Not even
regulatory developments like Reg II and the 2023 Amendment have
spurred competition. See id. ¶¶ 95–96, 167, 175. This allegedly
has allowed Visa to maintain high operating margins in the
United States—an indication of anticompetitive effects. See id.
¶¶ 63–64; Google, 747 F. Supp. 3d at 178.
Therefore, the complaint alleges plausibly that the PIN
networks’ inability to win transactions away from Visa despite
offering lower prices, and Visa’s lengthy and substantial
foreclosure of a two-sided market to other front of card
networks, taken together, indicate that Visa’s contracts may
have broken the competitive process itself. See MacDermid
Printing, 833 F.3d at 187 (noting that “the antitrust laws
protect competition, not competitors”). The possibility that
Visa’s pricing practices and superior network features may have
induced merchants and banks to enter into contracts with Visa is
“not irrelevant.” See ZF Meritor, 696 F.3d at 277. But the
12The complaint also alleges plausibly that Visa’s agreements not to
compete with competitors and potential competitors prevented entry and
thus aided in Visa’s alleged monopoly maintenance. See Google, 747 F.
Supp. 3d at 167–68. Visa’s alleged agreements not to compete are
addressed separately below.
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question whether Visa earned exclusivity using volume discounts
and superior features, or whether Visa used its monopoly power
and other non-price mechanisms to coerce its way into its
dominant position, is one that is inappropriate for resolution
on a motion to dismiss. See Syngenta, 711 F. Supp. 3d at 579.
Visa allegedly used its monopoly power to force long-term
exclusive dealing contracts on its customers. See Dentsply, 399
F.3d at 196; ZF Meritor, 696 F.3d at 283. And merchants and
banks alike were allegedly concerned that they would be unable
to meet consumer demand at Visa’s “punitive rack rates.” Compl.
¶¶ 12, 79. Thus, as alleged, Visa’s “exclusive agreements pose
precisely th[e] kind of threat” that the threat of supply
shortages did in ZF Meritor. See In re Remicade, 345 F. Supp. 3d
at 580; see also In re Surescripts, 608 F. Supp. 3d at 645–46
(recognizing that a dominant network can use loyalty discounts
to cement entry barriers and then “charge supracompetitive
prices” that “restrict the market’s overall number of
connections”).
Visa relies on NicSand, Inc. v. 3M Co., where the court
applied the price-cost test and affirmed the dismissal of the
plaintiff’s complaint. 507 F.3d 442, 447 (6th Cir. 2007) (en
banc). But NicSand does not help Visa. In that case, NicSand
alleged that 3M had taken over NicSand’s monopoly in
do-it-yourself automotive sandpaper by offering large up-front
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payments to retailers in exchange for multi-year agreements to
provide exclusive shelf space. Id. at 447–49. But in that case:
the retailers demanded exclusivity, not the suppliers, id. at
451–53; NicSand and 3M competed with each other on terms of
competition that NicSand had established, id. at 453–58; and the
predominant mechanism of exclusion was price competition in the
form of up-front payments, see id. at 451–53. In this case, the
complaint alleges that: Visa coerced exclusivity on its
customers; Visa, as the dominant incumbent network, forced
rivals to compete on unfavorable terms; and although Visa’s
alleged loyalty scheme involved volume discounts, it also relied
on significant non-price mechanisms of exclusion. Indeed, the
NicSand court noted that antitrust liability might arise if 3M
used its retailer contracts “and its current market dominance to
establish unreasonable barriers to entry in the future.” Id. at
457. The complaint alleges that Visa did just that.
In sum, the complaint alleges plausibly that Visa “use[d]
its power to break the competitive mechanism and deprive
customers of the ability to make a meaningful choice.” See ZF
Meritor, 696 F.3d at 285. Accordingly, Visa’s “characterization
of this case as a species of predatory pricing is not
persuasive.” See In re Surescripts, 608 F. Supp. 3d at 643; see
also Duke Energy, 111 F.4th at 354 (declining to apply “specific
conduct tests” where the plaintiff alleged “a complex or
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atypical exclusionary campaign”). Visa’s motion to dismiss based
on the price-cost test is therefore denied.
C. Agreements Not to Compete
Visa’s final argument is that the terms of Visa’s current
contracts with Apple, PayPal, and Square disprove and defeat the
Government’s claim that Visa agreed with competitors and
potential competitors not to compete. Br. at 20–25; Rep. at 7–
10.13 But that argument ignores the complaint’s allegations about
Visa’s courses of dealing with Apple, PayPal, and Square. The
question whether Visa’s partner agreements unreasonably restrain
competition, contribute significantly to Visa’s alleged monopoly
maintenance, or both, is one that cannot be answered at the
pleadings stage.
Visa’s partner contracts allegedly provide discounts and
incentives in a “quid pro quo” manner that “amount[s] to a
horizontal product market division” and “unreasonably
restrain[s] competition.” Compl. ¶¶ 112, 194.14 These contracts
13 Visa does not specify which claims for relief alleged in the
complaint this argument addresses. In any event, this argument raises
factual questions that are inappropriate for resolution on a motion to
dismiss. See Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162,
184 (2d Cir. 2012).
14 The complaint therefore does not make clear whether Visa’s partner
agreements are alleged to be illegal per se or whether their legality
should be determined under the rule of reason. See Compl. ¶¶ 112, 194.
“[N]aked restraints of trade” between horizontal competitors “with no
purpose except stifling competition” are illegal per se under Sherman
Act § 1. United States v. Topco Assocs., Inc., 405 U.S. 596, 608
(1972). But when the economic impact of an agreement is “not
immediately obvious,” the restraint should be judged under the rule of
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allegedly give Visa the ability to charge partners high rack
rates and behavioral fees if the partner begins to compete
directly with Visa. Id. ¶¶ 113–37. Visa has allegedly used or
threatened to use that ability to punish partners in the past.
See id.
Taken together, these allegations suggest plausibly that
Visa’s contracts with competitors and potential competitors “had
an actual adverse effect on competition as a whole in the
relevant market.” See Geneva Pharms., 386 F.3d at 506–07
(quoting Cap. Imaging Assocs., P.C. v. Mohawk Valley Med.
Assocs., Inc., 996 F.2d 537, 542 (2d Cir. 1993)); see also
Anderson News, 680 F.3d at 186, 189 (stressing the importance of
factual context in evaluating § 1 claims under Twombly); Starr
v. Sony BMC Music Ent., 592 F.3d 314, 323–24 (2d Cir. 2010)
(similar). The same allegations suggest plausibly that Visa’s
contracts work to suppress competition from fintech rivals and
to prevent entry by potential competitors, significantly aiding
Visa in its alleged monopoly maintenance. See Microsoft, 253
F.3d at 79; Google, 747 F. Supp. 3d at 167–68.
reason. See State Oil Co. v. Khan, 522 U.S. 3, 10 (1997); Leegin
Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886–87
(2007).
For purposes of this motion, it is unnecessary to resolve that
ambiguity in the complaint. Visa’s argument fails for an independent
reason: in general, factual disputes cannot be resolved on a motion to
dismiss.
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Visa’s focus on its current contracts ignores “the facts
peculiar to [its] business, the history of the restraint, and
the reasons why it was imposed.” See Nat’l Soc. of Pro. Eng’rs
v. United States, 435 U.S. 679, 692 (1978). To evaluate properly
Visa’s contracts with partners, it may be necessary to consider
Visa’s courses of dealing with its partners. See id. Moreover,
the Government contends that, in submitting contracts with
partners, Visa failed to attach relevant documents that support
the complaint’s allegations. Opp. at 22. Disposing of this claim
at the pleadings stage therefore “risks depriving the parties of
a fair adjudication of the claims by examining an incomplete
record.” See Chambers, 282 F.3d at 155.
Visa also argues that the challenged contractual clauses,
such as anti-steering provisions, are not anticompetitive. This
argument, however, overlooks the broader factual context alleged
in the complaint. See Anderson News, 680 F.3d at 186; Starr, 592
F.3d at 323–24. Namely, over the past decade, Visa allegedly
used financial incentives and termination threats to stymie
competition from partners. Compl. ¶¶ 120–37. Moreover, the
complaint alleges that Visa coerced partners into contractual
restraints that may plausibly bring about anticompetitive
effects, such as preferencing Visa in signup flow and default
settings. Id. ¶¶ 124, 132. Courts have recognized that such
default-setting practices may harm competition, especially in
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