US sues VeriFone to block buyout of rival Hypercom
updated 06:55 pm EDT, Thu May 12, 2011
Justice fears competition in POS market at risk
The US Department of Justice has filed a lawsuit seeking to block Verifone from gobbling up rival point-of-sale (POS) credit card information equipment vendor Hypercom. According to DOJ, the market is very concentrated. Verifone holds a 48 percent share of the US market, Hypercom, a 18 percent share, and French-based Ingenico 26 percent. Verifone had planned to sell off Hypercom's US operation to Ingenico, hoping that would pave the way for Governmental approval. However, the Justice department saw things differently.
The merger "exacerbates, rather than mitigates, the antitrust issues raised by the original transaction," said Christine Varney, head of the Department of Justice's Antitrust Division, in a statement. "The combination of VeriFone and Hypercom would likely lead to retailers paying higher prices for POS terminals."
The acquisition was announced last November. The $485 million deal was to be via a stock transaction.
Since the proposed merger, Verifone has come under increased pressure from NFC (Near Field Communications) devices and mobile payment systems such as those offered by start-up Square. Verifone attacked the security of Square's iOS and Android applications, but that assertion lost steam as VISA invested in Square. [via Reuters].
