PayPal’s takeover of iZet­tle re­ferred for in-depth in­quiry by watch­dog

The Daily Telegraph - Business - - Business - By Han­nah Boland

THE UK’s an­titrust watch­dog has re­ferred PayPal’s takeover of Swedish start-up iZet­tle for an in-depth in­ves­ti­ga­tion over fears it will force up prices for cus­tomers and lead to a worse qual­ity in ser­vice.

The Com­pe­ti­tion & Mar­kets Authority had warned late last month that the PayPal deal could re­sult in “in­suf­fi­cient com­pe­ti­tion 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 ben­e­fited cus­tomers by driving fu­ture in­no­va­tion and lower prices”, and urged the com­pany to of­fer “ac­cept­able ways” to ad­dress the con­cerns. In a state­ment yes­ter­day, the in the UK” for pay­ments 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 it was “work­ing co-op­er­a­tively 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 pro­duc­tively” the com­pany was “en­gag­ing with the CMA.

Speak­ing to CNBC at the Slush tech­nol­ogy con­fer­ence in Helsinki, Fin­land, Mr Ready said: “We ab­so­lutely be­lieve that we will de­mon­strate that we are bring­ing more choice [and that] we are pro-com­pe­ti­tion. We are re­ally look­ing to ex­pand the mar­ket in ways that are great for small busi­ness and great for con­sumers alike.”

Be­tween now and Christ­mas Day an as­ton­ish­ing 9m bot­tles per week will be de­liv­ered from Ac­co­lade Park in Bris­tol to su­per­mar­kets, off-li­cences and bars. The plant pro­duces well known brands like Ku­mala, Hardys and Echo Falls.

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