Department of Justice sues VeriFone and Hypercom

A civil antitrust lawsuit was filed by the Justice Department against the acquisition by VeriFone Systems Inc. of Hypercom Corp. In the official statement the DOJ said that the deal would substantially trim the competition in the market of point-of-sale terminals in America which in turn would result in higher prices and lame innovation.

While Hypercom and VeriFone proposed their plan to fix the antitrust concerns it failed to adequately resolve those concerns, says the Department.

VeriFone and Hypercom together control more than 60 percent of the U.S. market for the POS terminals used by the largest retailers. They are two of only three substantial sellers of other types of POS terminals.

Last year, November 17, VeriFone agreed to acquire Hypercom in a deal estimated at $485 million. In a move to resolve antitrust concerns the Hypercom announced that it had entered into an agreement to sell its U.S. business to Ingenico S.A., the largest provider of POS terminals worldwide and the only other significant competitor to VeriFone and Hypercom in the United States.

According to the department’s complaint, the planned sale of Hypercom’s U.S. 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, the structure of the agreements between Ingenico and VeriFone, the only two significant POS sellers in the United States post-merger, enhances VeriFone and Ingenico’s ability to coordinate pricing for all POS terminals.