Justice Department sues to block merger of electronic transaction companies
Thursday, October 23rd 2003, 12:00 am
By: News On 6
WASHINGTON (AP) _ The Justice Department filed suit Thursday to block the $7.3 billion acquisition of Concord EFS Inc. by First Data Corp., contending the deal would substantially reduce competition in the electronic financial transaction industry.
Concord and First Data own two of the major personal identification number networks _ STAR and NYCE, respectively _ that allow consumers to use debit cards at banks, stores and other businesses.
``If allowed to proceed, this merger of two of the three largest PIN debit networks will lead to higher prices to merchants, forcing them to pass on those price increases to many consumers throughout the United States in the form of higher prices for general merchandise,'' said R. Hewitt Pate, assistant attorney general for the Justice Department's antitrust division.
In afternoon trading on the New York Stock Exchange, Concord shares were down $2.51, or 18 percent, at $11.07. Shares of First Data gained $1.59, or 4 percent, to $37.49.
First Data, based in Greenwood Village, Colo., and Memphis, Tenn.-based Concord announced a stock deal in April. The merger, officials estimated, would result in a single company that would generate $10 billion in annual revenue and employ 31,000 people worldwide.
The government suit was filed in U.S. District Court in Washington. Also joining in the case to block the merger are Connecticut, Illinois, Louisiana, Massachusetts, New York, Ohio, Texas and the District of Columbia.
First Data serves about 3 million merchant locations, 1,400 card issuers and millions of consumers around the world using debit and credit cards, money transfers, money orders and checks. Among its subsidiaries is Western Union.
Concord provides technology and network systems that make electronic financial transactions faster and more secure.