This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The UK Competition and Markets Authority (CMA) has raised concerns regarding PayPal’s planned takeover Swedish mobile payments rival iZettle.
The deal, which is valued at $2.2 billion, will combine two of the largest suppliers of mobile point of sale (POS) devices in the UK, leading to the CMA raising concerns that the takeover will increase payment fees and receiving a lower quality of service.
PayPal may face ‘insufficient competition’ in the UK
After completing its Phase 1 investigation into the deal, which was completed in September, the CMA felt that PayPal may face insufficient competition in the UK market once its takeover of iZettle is completed.
iZettle had initially planned to go public, only for PayPal to swoop in at the last minute with a takeover offer.
The CMA said that had iZettle not agreed to the merger, it had the potential to provide ‘strong competition for PayPal and potentially benefitted customers by driving future innovation and lower prices’ in the emerging market for omni-channel payment services.
‘Payment services markets are evolving so it’s particularly important to look to the future when we assess competition and the effects of mergers on customers,’ CMA Executive Director Andrea Gomes da Silva said.
‘While iZettle is a relatively recent entrant to payment services, it has already established a market-leading position in mobile point of sale devices and was well-placed to compete against PayPal in other emerging markets.
‘That’s why we are concerned that PayPal’s takeover could lead to higher prices or reduce the quality of the services available to customers,’ she added.
If the merging businesses are unable to address the CMA’s concerns, the merger will be referred for an in-depth Phase 2 investigation, to be carried out by a group of independent CMA panel members.
.jpg)
