AIB venture with e-commerce player gets EU go-ahead

11 Jan 2008

Under EU merger regulations, the European Commission has cleared a proposed joint venture between AIB and e-commerce player First Data Corporation to deploy credit and debit card payment authorisation services across Ireland and the continent.

First Data provides e-commerce and payment services for businesses worldwide.

The joint venture between AIB and First Data will offer services relating to the use and acceptance of payment cards, particularly in Ireland but also in other EU member states.

The Commission concluded the operation would not significantly impede effective competition in the European Economic Area (EEA) or in any substantial part of it.

The joint venture will provide two types of payment card services: merchant acquiring and payment card processing.

It is understood that the companies’ activities in overall merchant acquiring overlap in three countries, the UK, Italy and the Netherlands.

The Commission found that the companies’ joint market shares do not exceed 15pc in any of these countries.

Following the transaction, the parties’ joint share of all merchant acquiring in the EEA would be less than 1pc.

Due to the limited activities of AIB, the Commission said the increase in market share would be marginal.

“As regards payment card processing, there are no significant overlaps and there are strong competitors in all member states in which the activities of both parties overlap.”

As Allied Irish Banks currently accounts for a substantial part of the Irish market for merchant acquiring and First Data Corporation holds a controlling stake in OmniPay, a payment-processing platform located in Ireland, the Commission also checked whether any competition concerns would arise here.

In February 2006, OmniPay signed a three-year global merchant-processing agreement with First Data and HSBC. Under the terms of the agreement, OmniPay would enable HSBC to acquire merchants with a pan-European or global presence on a single processing platform.

In its ruling today, the European Commission found that OmniPay provides processing services for transactions originating all across Europe, not just in Ireland, and that the joint venture would face competition from a number of parties, both in Ireland and elsewhere in the EEA.

By John Kennedy