UK watchdog fines PayPal £250,000

24 Sep 2019

Image: PA

PayPal has been fined £250,000 by the UK’s competition authority, which says the company failed to keep itself and iZettle separate during a merger investigation.

Online payments giant PayPal has been fined £250,000 by a competition watchdog for failing to keep it and iZettle separate in the UK while an investigation was carried out into their merger.

US-based PayPal had already bought Sweden’s iZettle in September 2018 for $2.2bn, but the Competition and Markets Authority (CMA) put UK integration efforts on hold to investigate the deal.

The CMA cleared the merger in June but has since found that PayPal did not comply with certain requirements during its probe, despite assurances.

‘The failure was not caused by a significant and genuinely unforeseeable or unusual event. Nor was it caused by an event beyond the control of PayPal’

‘No reasonable excuse’

While PayPal was granted permission to go about integrating with iZettle outside the UK, the CMA claims that the firm carried out cross-selling pilot campaigns in France and Germany that also involved potential customers located in the UK being contacted.

The watchdog says it has identified 76 UK potential customers in total, 16 of which had an online and offline presence in the UK, but fears that “significantly more UK potential customers were contacted given the total number of customers contacted”.

“The CMA finds that PayPal has no reasonable excuse for its failure to comply with the IEO [initial enforcement order],” it said in its penalty notice.

“The CMA has carefully considered all submissions made by PayPal but does not consider that the explanations provided for its actions amount to a reasonable excuse.

Support Silicon Republic

“Moreover, the failure was not caused by a significant and genuinely unforeseeable or unusual event. Nor was it caused by an event beyond the control of PayPal.”

PayPal’s response

In response to the fine, PayPal said it “takes compliance seriously” and had “learned from this process”.

“While we respectfully disagree with the CMA’s conclusions, we understand the importance of Initial Enforcement Orders (IEOs) in the UK’s merger control regime and treated compliance with the IEO with the utmost importance throughout the merger review,” a spokesperson said.

“The CMA has confirmed that the alleged infractions that led to this fine were not intentional and did not have any impact in practice, and they were remediated as soon as the CMA raised concerns.

“While we are disappointed with this outcome, PayPal takes compliance seriously and has learned from this process.”

– PA Media