𝗧𝗵𝗶𝘀 𝗮𝗿𝘁𝗶𝗰𝗹𝗲 𝘄𝗮𝘀 𝘄𝗿𝗶𝘁𝘁𝗲𝗻 𝗯𝘆 𝗜𝗻𝘁𝗲𝗴𝗿𝘂𝗺 𝗘𝗦𝗚 𝗦𝗲𝗻𝗶𝗼𝗿 𝗔𝗻𝗮𝗹𝘆𝘀𝘁 𝗠𝗼𝗹𝗹𝘆 𝗙𝗿𝗮𝘇𝗲𝗿.

The U.S. Department of Justice has filed a lawsuit against Visa, accusing the company of engaging in practices that stifle competition in the debit card market.

This is the latest competition lawsuit that has arisen following the Biden administration’s crackdown on monopoly concerns.

The case, flagged by the Integrum ESG real-time tracker, underscores rising concerns about Visa’s market dominance; more than 60% of debit transactions in the US are processed by the company, according to the lawsuit.

Visa allegedly used its power to block alternative networks and impose excessive fees, which not only raises costs for businesses and consumers but also hampers innovation in the payments sector.

For investors, this highlights why tracking ESG metrics—notably those related to competitive behaviour —is so critical. Early warnings like these can offer valuable insight into potential legal and regulatory risks before they escalate.

Visa currently performs poorly in the material metric of ‘Competitive Behavior’ on the Integrum ESG Platform, with an overall risk score of 1.5 out of 4. While they do have an anti-trust policy in place, their disclosure lacks clarity regarding potential liabilities from ongoing legal proceedings mentioned in their 10-K report.

A prime example of this transparency gap is highlighted in the Integrum ESG Performance Score Glassbox, where Visa’s statement reads,

"...on June 17, 2020, the Supreme Court found that Visa's UK domestic interchange restricted competition under applicable competition law. On September 30, 2021, Visa reached a confidential settlement agreement resolving on Merchant's claims."

Visa’s failure to disclose how much was spent on fines or legal defence during that fiscal year reflects a lack of transparency. As a result, they’ve been given a Performance Score of 0, placing them among the lowest in their peer group.

This low score serves as a clear warning for investors, signalling that Visa is not adequately managing this significant sector-specific risk.

The recent lawsuit highlights how neglecting such important ESG risks can have significant financial repercussions - evident in the 5% drop in Visa's share price following the news.

In a world increasingly focused on transparency and fair competition, investors must prioritise monitoring such ESG risks to better understand the long-term health and sustainability of their portfolios.

𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸?

Want to share your thoughts? Email us via contact@integrumesg.com or fill in this form HERE to book in a demonstration on our own approach to ESG analysis.