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The UK Competition and Markets Authority (CMA) announced that PayPal’s $2.2 billion takeover of Swedish payments company iZettle will enter a more in-depth second phase of investigation after the former failed to address the regulator’s concerns.
During its first phase of investigation, the CMA raised concerns that the deal could leave PayPal ‘facing insufficient competition’ in the UK market for mobile point of sale devices.
The regulator also said that the merger could negatively impact future competition in the emerging ‘omni-channel’ payment services space.
As such, the UK watchdog asked PayPal to offer proposals that would address the concerns that it raised during its initial investigation, but the payments chose not to, which has resulted in the merger entering a Phase 2 investigation.
The deadline for the CMA’s final decision is 21 May 2019.
PayPal-iZettle face being ‘electronically ringfenced’
The decision by the CMA to enter the merger into a second phase of investigation comes after the two companies completed their merger back in September of this year, UK watchdog blocking the two payments providers from further integrating in the UK market over competition concerns.
Documents published by the CMA in October said that the two payments companies could be forced to keep their respective businesses in the UK ‘electronically ringfenced’ until the regulator has completed its investigation into the deal.
‘PayPal is working cooperatively with the CMA and is committed to demonstrating to the panel of experts that the market is, and will remain, competitive,’ a PayPal spokesperson said.
The deadline for the CMA’s final decision is May 21, 2019.