Western Union Probe Initiated By The Justice Department

Date: Friday, February 6, 2004

DENVER (AP)--The Justice Department has opened a civil antitrust investigation of Western Union Financial Services, the money-transfer subsidiary of First Data Corp.

The government has demanded information about contracts between Western Union, which runs the world's largest consumer money-transfer network, and its independent agents, Denver-based First Data said Thursday.

First Data said in a statement that Western Union's contract practices ``reflect common industry norms.'' It said the Justice Department has not begun any legal action against Western Union.

Spokeswoman Wendy Carver-Herbert declined further comment.

The demand for information means the Justice Department is at least studying whether to sue Western Union, said San Francisco lawyer Dana Hayter, a former staff attorney with the Justice Department's antitrust division.

``It's an investigative subpoena that the DOJ can send out when it's investigating whether it should file an antitrust case,'' Hayter said.

Less than two months ago, the Justice Department settled a lawsuit over First Data's $6.9 billion takeover of Concord EFS Inc.

The settlement, announced the day the government's lawsuit was to go to trial, required First Data to sell NYCE Corp., the nation's third-largest personal identification number (PIN) network. Concord operates the nation's largest PIN network, STAR.

Western Union is the largest component of First Data's payment-services division, which accounted for $3.7 billion of First Data's $8.4 billion revenue in 2003.

Operating profits for the payment-services division were $1.2 billion.

First Data reported a 14 percent gain in fourth-quarter earnings Tuesday, citing strong growth in Western Union.

In trading Friday on the New York Stock Exchange, First Data shares were up 38 cents to close at $38.88.

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