CMA reviewing deal
PayPal merger with iZettle ‘raises competition concerns’
Jacob De Geer, founder of iZettle, with Robin Knox of intelligentPOS in Edinburgh (photo by Terry Murden)
PayPal’s planned £1.7 billion merger with rival cash settlement company iZettle has raised competition concerns and may be subject to a inquiry.
After an initial investigation the Competition and Markets Authority has decided that the deal, announced in May, may result in a “substantial lessening of competition”.
The deal, which completed in September, brings together the two largest suppliers of mobile point of sale devices in the UK. Sweden-based iZettle acquired Edinburgh-based IntelligentPOS in 2016.
The CMA has now 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 investigation, to be carried out by a group of independent CMA panel members.