The Justice Department filed a lawsuit Monday to block Citicorp's acquisition of the electronic benefits transfer business of Gtech Corp., West Greenwich, R.I.

The suit, filed in U.S. District Court in Wilmington, Del., claims the deal would eliminate competition in EBT, which involves the automation of food stamps, welfare checks, and other government benefits using cards and electronic funds transfer networks.

A Chicago-based unit of Citicorp and the Gtech subsidiary, Transactive Corp., were the two leaders in the EBT field when Citicorp agreed to make the $11.5 million acquisition in February. Justice said Citicorp would control 74% of state EBT services, which could cause prices to rise and quality to decline.

"Transactive is Citicorp's most important rival" in EBT, the Justice Department said in its 20-page complaint. "Of the firms presently in the market, only three firms have developed and implemented large-scale EBT processing systems."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.