The United States Department of Justice (“DOJ”) is seeking to revive competition in the market for point-of-sale terminals by blocking VeriFone Systems Inc.’s proposed $485 million acquisition of Hypercom Corp.
Both companies operate in the electronic payments industry, and the DOJ claims that the deal would harm competition in the market for point-of-sale terminals in the United States.
The DOJ has commenced an antitrust lawsuit alleging that the merger of VeriFone and Hypercom would result in a dominant point-of-sale terminal manufacturer that would be likely to raise prices and reduce innovation, quality, product variety and service. The complaint also alleges that a divestiture to French competitor Ingenico that had been proposed would not resolve the competitive concerns raised by the VeriFone/Hypercom transaction.
Last month, Hypercom announced that it had entered into an agreement to sell its U.S. point-of-sale terminal business to Ingenico in an effort to allay such antitrust concerns. The DOJ, however, opined that the sale would not resolve antitrust concerns raised by the VeriFone deal because the Hypercom assets would be sold to another significant competitor in the market in a manner that does not create a new, independent, long-term competitor.
However, Hypercom has now abandoned its plans to divest its point-of-sale business to Ingenico after U.S. regulators stated that the divestiture would not satisfy the DOJ’s antitrust concerns. The DOJ’s lawsuit to block the overall deal between VeriFone and Hypercom is still pending, and the DOJ is in discussions with them to identify an alternative buyer, presumably one the DOJ would consider to have the potential to be a long-term competitor of the companies.