The UK’s antitrust watchdog has referred PayPal’s takeover of Swedish startup iZettle for an in-depth probe over fears it will force up prices for customers and lead to a worse quality in service.
The Competition & Markets Authority warned late last month that the PayPal deal could result in “insufficient competition in the UK” for payments services.
It had said its initial investigation had “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”, and urged the company to offer “acceptable ways” to address the concerns.
In a statement on Wednesday, the CMA said: “As PayPal has chosen not to offer proposals to address the CMA’s concerns, the merger will now be referred for a Phase 2 investigation by an independent group of CMA panel members.” A final decision on the deal will be made on May 21.
The move by the CMA comes even though PayPal’s $2.2bn (£1.7bn) takeover of iZettle has already completed, back in September. The watchdog has the power to reverse deals, if they have already completed, or to force the companies to dispose of certain assets.
A spokesman for PayPal said the company was “working cooperatively with the CMA and is committed to demonstrating to the panel of experts that the market is, and will remain, competitive”.
Earlier this week, PayPal’s chief operating officer Bill Ready had said the company was “engaging productively” with the CMA.
“We absolutely believe that we will demonstrate that we are bringing more choice [and that] we are pro-competition,” Ready said. “We are really looking to expand the market in ways that are great for small business and great for consumers alike.”
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