The US’ Department of Justice (DOJ) has filed
a civil antitrust lawsuit intended to block the acquisition of
e-payments solutions provider Hypercom by rival VeriFone worth
$485m.
It is claimed the proposed deal would
“substantially” lessen competition in the sale of POS terminals in
the US, resulting in higher process and reduced innovation,
quality, product variety and service.
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In an effort to resolve antitrust issues with
the merger, on 4 April 2011 Hypercom announced it had entered into
an agreement to sell its US business to Ingenico – the largest
provider of POS terminals worldwide and the only other significant
competitor to VeriFone and Hypercom in the US.
However, this did not adequately resolve the
DOJ’s competitive concerns and it went ahead and filed its lawsuit
in the US District Court in Washington.
“The combination of VeriFone and Hypercom
would likely lead to retailers paying higher prices for POS
terminals,” said Christine Varney, assistant attorney general in
charge of the Department of Justice’s Antitrust
Division.
“The proposed divestiture does not resolve the
significant competitive concerns posed by the merger and in some
ways exacerbates them.”
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By GlobalDataAccording to the department’s complaint, the
planned sale of Hypercom’s US POS terminal business to Ingenico
does not resolve the antitrust concerns raised by the
VeriFone/Hypercom transaction because the assets are to be sold to
another significant competitor in the market in a manner that does
not create a new, independent, long-term competitor.
In addition, it is argued that the structure
of the agreements between Ingenico and VeriFone, the only two
significant POS sellers in the US post-merger, enhances VeriFone
and Ingenico’s ability to coordinate pricing for all POS
terminals.
