UK competition regulator to review proposed Mastercard/VocaLink remedies

Maria Nikolova

The companies have proposed remedies seeking to remove the need for an in-depth merger investigation.

The Competition and Markets Authority (CMA), the UK’s primary competition and consumer authority, has announced that it would consider the remedies proposed by Mastercard UK Holdco Ltd, a subsidiary of Mastercard International Incorporated (Mastercard), and VocaLink Limited, with regards to the regulator’s competition concerns raised as a result of the purchase of VocaLink by Mastercard.

In a filing with the London Stock Exchange earlier today, the CMA says that it has received proposals from the two companies seeking to respond to concerns specified by the regulator earlier this month.

In particular, the watchdog is concerned that since VocaLink and Mastercard are two of the three most credible providers of infrastructure services to the LINK ATM network operating across the UK, the merger would cut the number of bidders and limit the ability of the LINK scheme to get good value when tendering for an infrastructure provider.

VocaLink is a supplier of payment infrastructure services to three major UK interbank payment systems: Bacs, the Faster Payments Service (FPS), and the LINK ATM network. The CMA has not found concerns in the provision of payment infrastructure services to Bacs or FPS, however.

The regulator has gauged the merger in the context of a review by the UK Payment Systems Regulator (PSR) into the ownership and competitiveness of infrastructure that supports the three major UK payment systems. The PSR has made multiple recommendations aimed at improving competition in payment systems.

Today’s announcement specifies that Mastercard and VocaLink have outlined remedies to the CMA, with the measures seeking to cut the cost to LINK of switching from VocaLink to alternative suppliers of infrastructure services.

The list of proposals includes:

  • VocaLink making its connectivity infrastructure available to a new supplier of infrastructure services to LINK.
  • VocaLink transferring or licensing to LINK the intellectual property rights relating to the LINK LIS5 messaging standard.
  • VocaLink contributing to LINK members’ switching costs.

The CMA has until March 15, 2017 to make its decision on the proposed remedies. In case the regulator decides not to accept these, the merger will be referred for an in-depth investigation.

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