PayPal’s iZettle acquisition raises UK competition concerns
The UK’s Competition and Markets Authority (CMA) is snooping around and says that PayPal’s takeover of Swedish start-up iZettle could lead to higher prices or reduce the range of services for customers.
As reported in May, PayPal said it will acquire small business e-commerce platform iZettle for $2.2 billion, giving it a payments boost in Europe and Latin America.
The CMA has been investigating the takeover – completed in September 2018 – and which brings together the two 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 watchdog explains that its 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 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, says: “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.”
The CMA adds that if the merging businesses are unable to address its 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.
As reported yesterday (26 November), the CMA said it was looking into Nasdaq’s $190 million all cash offer for Swedish trading tech firm Cinnober.
The CMA is considering whether the acquisition “may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services”.