Department of Justice Files Enforcement Action Against Bain & Company over Plaid Acquisition
Posted on 10/28/2020
In a major sea change, the U.S. Department of Justice (DOJ), under the Trump administration, has brought the issues of antitrust to the forefront after decades of decline. The DOJ filed a petition in the U.S. District Court for the District of Massachusetts to enforce Bain & Company’s compliance with the department’s Civil Investigative Demand (CID). The department issued the CID to third-party Bain as part of its investigation of Visa, Inc.’s proposed acquisition of Plaid Inc. Boston-based Bain & Company, Inc. is a major consulting firm to businesses and organizations globally. U.S. Senator Mitt Romney of Utah is a founder of Bain Capital, a spin-off of Bain & Company. Visa, Inc. is a global payments company that operates the largest debit network in the United States. Plaid Inc. is a financial services company incorporated in Delaware and headquartered in San Francisco, California. In January 2020, Visa agreed to buy Plaid for US$ 5.3 billion. Some customers speculate that Plaid could eventually create an entirely cardless payments network that scraps fees that Visa and Mastercard charge to merchants to process the payments. Why did Plaid want to be acquired by Visa? Plaid had raised more than US$ 300 million in venture capital funding.
As alleged in the petition, Bain & Company has withheld important documents demanded under the CID, asserting unsupported claims of privilege over the documents, thereby stymying the Antitrust Division’s investigation. On June 11, 2020, the division issued Bain a CID requiring Bain to answer interrogatories and produce documentary material, including documents that discuss Visa’s pricing strategy and competition against other debit card networks that may be important to the division’s analysis of the proposed acquisition’s effects. The petition alleges that Bain has refused to produce these documents, claiming a seemingly blanket privilege over almost all of them.
The DOJ is taking a closer look at fintech deals. The DOJ is also looking at Intuit’s plan deal to buy Credit Karma for US$ 7.1 billion and Mastercard Corporation’s bid to buy Finicity for nearly US$ 1 billion.
