The Competition and Markets Authority (CMA) has found that PayPal’s takeover of Swedish start-up iZettle could lead to higher prices or reduce the range of services for customers.
The CMA has been investigating PayPal’s $2.2 billion takeover of Swedish mobile payments company iZettle. The deal, which completed in September 2018, brings together the 2 largest suppliers of mobile point of sale devices in the UK.
After completing its Phase 1 investigation, the CMA has found that PayPal could face insufficient competition in the UK after acquiring its market-leading rival. The finding raises concerns that the could result in customers, which include small and medium-sized businesses, paying higher prices or receiving a lower quality service.
Additionally, the CMA has carefully considered the potential impact of the merger on the emerging market for ‘omni-channel’ payment services (‘Omni-channel’ payment services are ‘online’ and ‘offline’ payment services combined within an integrated offering for customers), where PayPal has already established a strong position. The investigation found that had iZettle not been taken over, it could have provided strong competition for PayPal and potentially benefitted customers by driving future innovation and lower prices.
Andrea Gomes da Silva, CMA Executive Director, said: Payment services markets are evolving so it’s particularly important to look to the future when we assess competition and the effects of mergers on customers. … While iZettle is a relatively recent entrant to payment services, it has already established a market-leading position in mobile point of sale devices and was well-placed to compete against PayPal in other emerging markets. That’s why we are concerned that PayPal’s takeover could lead to higher prices or reduce the quality of the services available to customers.
If the merging businesses are unable to address the CMA’s concerns, the merger will be referred for an in-depth Phase 2 investigation, to be carried out by a group of independent CMA panel members.
Further details are available on the investigation case page.
Never miss an update relevant to your industry, sign up for our newsletter for all the latest headlines.