The Competition and Markets Authority (CMA) has been investigating PayPal’s £1.73bn takeover of Swedish mobile payments company iZettle. The deal, which completed in September 2018, brings together the two largest suppliers of mobile point of sale devices in the UK.
After completing its Phase One 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 merger 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, 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 Two investigation, to be carried out by a group of independent CMA panel members.
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