UK competition watchdog clears PayPal’s takeover of iZettle
The approval is granted about a month after the CMA provisionally cleared the deal.
The UK Competition and Markets Authority (CMA) today announces that it has cleared PayPal’s completed takeover of rival mobile payments company iZettle. The approval is granted about a month after the regulator provisionally cleared the deal and follows an in-depth, Phase 2, investigation.
The CMA notes that both companies provide mobile point of sale (mPOS) devices that enable businesses to take ‘offline’ payments through a card reader connected to a smartphone or tablet. The two companies are also active in the emerging market for ‘omni-channel’ payment services, through which businesses can take ‘offline’ and ‘online’ payments through a single provider.
The Phase 1 investigation by the CMA had triggered concerns that PayPal’s purchase of its rival might reduce competition in the supply of mPOS devices in the UK. This led to the deal being referred for a comprehensive, Phase 2, probe. The CMA then announced in April that it had provisionally found the deal should be cleared. Having consulted on this provisional finding, the CMA has now confirmed the merger has been cleared.
The CMA reviewed extensive evidence relating to PayPal’s rationale for the merger and what the commercial strategies of PayPal and iZettle would have been if the merger had not taken place. It also considered how customers choose between the more novel mPOS devices, and ‘traditional’ point of sale devices.
The investigation has shown that, while iZettle and PayPal are two of the largest suppliers of mPOS devices, their customers are also willing to switch to ‘traditional’ POS devices. The two largest suppliers of payment services to smaller merchants, Worldpay and Barclaycard, account for almost 60% of the market at present and will continue to constrain the merged company. The merged company will also face significant competition from other mPOS-only players, such as Square and SumUp, which have both grown significantly in recent years.
In omni-channel services, the CMA found that iZettle would only have been able to develop its offering slowly and would have remained a marginal player for the foreseeable future. The CMA also found that other significant competitors would be more important constraints on PayPal.
PayPal’s $2.2 billion takeover of Swedish mobile payments company iZettle was completed in September 2018.