Antitrust Filing Against Shift4 Rightfully Dismissed. For Now.

Earlier this year Payment Logistics (PLL) filed an antitrust suit against Shift4, a payments rollup of restaurant POS solutions. You can read our original write-up in the above link, but for a summary know this:

Payment Logistics, a competing payments gateway, contended that Shift4 was forcing their own payment solutions on their customers, thus adversely impacting other processors who might have otherwise conducted business with Shift4’s merchants.

Six months after the filing a judge threw the case out of court. Vroom.

U.S. District Judge M. James Lorenz ruled that, “The court infers that reasonable interchangeability of use exists for direct connection POS systems within the payment interface products. As such, the court finds PLL’s definition for payment interfaces for POS systems specializing in [mid-to-large table-service restaurants] market is facially unsustainable.”

It seems to be a technicality, and PLL will return with an amended definition of Product Market.

Shift4 argued that the two markets Payment Logistics tried to establish — one for payment interfaces that are compatible with Shift4’s POS systems, and the second for payment interfaces that work with any restaurant POS — don’t actually exist.

Shift4 provided us with commentary on this outcome:

We are pleased with the court’s decision. We believed from the beginning that Payment Logistics’ complaint did not state a claim. Shift4 Payments operates in a highly competitive market and offers go-to-market strategies that create strong value propositions for our customers and sales partners alike.

Consistent with our (non-JD) analysis, we think PLL will have a difficult time ultimately upholding any antitrust finding for three reasons.

1. Shift4 does not have a monopoly in the market. There’s still too much churn and fragmentation in restaurant POS to worry about it
2. Shift4 has not demonstrated a strong arm in forcing merchants to switch to their processing. There are competitors who gripe this is happening yet when we investigate there’s never any proof. Seriously, we’re still waiting for some. It’s great marketing to badmouth competitors but without data to back it up it will eventually ring hollow
3. Like Amazon, Shift4 is investing in a number of solutions that increase the value and decrease the price of their POS offerings. Assuming an IPO filing doesn’t get in their way, we anticipate some drastic changes that will make this obvious over the next 12-18 months with their API partnerships