Justice Department Sues To Block Merger Of Electronic Transaction CompaniesJustice Department Sues To Block Merger Of Electronic Transaction Companies

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.

The lawsuit contends that, using even conservative estimates, the two companies would control 45 percent of the PIN network industry in the United States if the merger went ahead.

Concord shares plunged 20 percent, or $2.76, to $10.82 on the New York Stock Exchange. The shares had been up slightly most of the day before dropping shortly before the stock was halted pending the announcement. Shares of First Data gained 50 cents to $36.40.

First Data, based in Greenwood Village, Colo., and Memphis, Tenn.-based Concord announced the 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.

In a joint statement, the companies said they would comment on the developments after reviewing the government's complaint.

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.