PayPal / iZettle merger raises competition concerns
The CMA has found that PayPal鈥檚 takeover of Swedish start-up iZettle could lead to higher prices or reduce the range of services for customers.
The Competition and Markets Authority (CMA) has been investigating PayPal鈥檚 $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 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 鈥榦mni-channel鈥� 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鈥檚 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鈥檚 why we are concerned that PayPal鈥檚 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鈥檚 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.
Notes to editors
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鈥極mni-channel鈥� payment services are 鈥榦nline鈥� and 鈥榦ffline鈥� payment services combined within an integrated offering for customers.
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The CMA is the UK鈥檚 primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
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Media enquiries to the CMA should be directed to [email protected] or 020 3738 6460.