$500 billion worth F1 sponsor put under investigation by US Department of Justice
VCARB's major sponsor Visa facing allegations of violating US laws has raised concerns about the impact it might have on the team in 2025.
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VCARB01 (via IMAGO)
Visa, one of the world’s largest payment networks, valued at $500 billion, became a sponsor for Red Bull’s junior team, VCARB, at the start of the 2024 F1 season. Securing such a renowned sponsor was a major success for the Faenza-based team. However, Visa is now under investigation for potential violations of Sections 1 and 2 of the 1890 Sherman Antitrust Act.
The U. S. Department of Justice (DOJ) claims Visa controls most debit transactions and is unfairly using its power, which violates laws. Merrick Garland, Attorney General of the DOJ, stated that Visa handles 70% of all online debit payments in a market worth more than $4 trillion. The government believes Visa is making illegal deals to prevent retailers and banks from using competing payment networks.
It holds 70% of all online debit transactions in a $4 trillion market. To keep this monopoly, they allegedly uses illegal agreements to punish merchants and banks.
Merrick Garland said, as reported by RacingNews365
Garland explained that Visa pressures competitors to avoid the market by threatening high fees for those who attempt to compete. If they agree not to challenge Visa, the company offers them large rewards. The DOJ has focused on this issue and decided to file a lawsuit against the multinational payment company.
It coerces would-be market entrants into unlawful agreements not to compete by threatening high fees if they do not cooperate and promising big payoffs if they do.
Merrick Garland added
Visa General Counsel asserts the DOJ is ignoring the reality in the ongoing investigation.
Julie Rottenberg, Visa General Counsel, stated that the lawsuit ignored the fact that the company is one of many competitors in a growing debit market, where new companies are doing well. She emphasized that Visa is proud of the payment network it has built, suggesting the company believes it is not unfairly dominating the market.
According to Rottenberg, the market is competitive and Visa is not the monopolist that the DOJ alleges it to be.
The lawsuit ignores the reality that Visa is just one of many competitors in a debit space that is growing, with entrants who are thriving.
Julie Rottenberg responded
The outcome of the lawsuit has not yet been made public. However, if the ruling goes against Visa, it could significantly impact RB. This is only RB’s first year (in the current rebranded state) in F1 and losing a major sponsor would create financial difficulties for them next season.
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Gaurang Kadam
(535 Articles Published)