Magazine article American Banker

Citigroup's Split from Visa May Cast Antitrust Case in a New Light

Magazine article American Banker

Citigroup's Split from Visa May Cast Antitrust Case in a New Light

Article excerpt

Citigroup's dispute with Visa U.S.A. may be a mixed blessing for the Department of Justice's antitrust prosecution against the bank card associations.

If Citi concentrates its credit card activity with MasterCard, it would satisfy the government's desire that big banks make a firm choice of brand.

But the realignment might also make it harder to prove that Visa and MasterCard do not effectively compete against each other because of their common bank ownership.

The Citi-Visa split may be to the credit card case what the America Online-Netscape merger announcement is to the Microsoft antitrust trial. Microsoft lawyers in Washington are arguing that the deal underscores how competitive the software market is.

"I would imagine that DOJ would be applauding this move," antitrust lawyer Joe Sims of Jones, Day, Reavis & Pogue in Washington said of Citigroup's apparent defection to MasterCard. "If DOJ is being pragmatic about it, they wouldn't care whether it is the market or their litigation that forces change."

Still, legal experts do not expect the government to withdraw its suit. After three years of investigating, said an attorney close to the litigation, "they want to get something out of it. They are not going to fold."

Justice Department spokeswoman Gina Talamona said, "Based on the reports, it's a step in the right direction." But "Citi is only one bank, and we are looking for greater competition industrywide, between all card networks, including American Express and Discover."

Only one other large bank, Bank of America, has explicitly publicized its support for the kinds of changes Citi was apparently seeking in discussions with Visa and MasterCard. Both banks support moving the association logo to a less prominent position on the card.

Justice could decide to target other aspects of the card industry. …

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