The U.K. antitrust watchdog is looking into PayPal‘s acquisition of European startup iZettle, according to The Wall Street Journal (WSJ).
In May, PayPal announced it was buying the FinTech company for $2.2 billion in cash. The news came almost one year after iZettle said it would enable users across Europe to register local mobile payment methods and send invoices through its point-of-sale (POS) app. With the app, businesses could enable the British Pay by Bank app, Swedish Swish, Norwegian Vipps and MobilePay in Denmark, Finland and Norway.
However, the deal, which combines the two largest suppliers of mobile POS devices in the U.K., is now being scrutinized by the country’s Competition and Markets Authority (CMA).
“After completing its Phase One investigation, the CMA has found that PayPal could face insufficient competition in the U.K. after acquiring its market-leading rival. The finding raises concerns that the merger could result in customers — which include small and medium-sized businesses [SMBs] — paying higher prices or receiving a lower-quality service,” the agency said in a press release.
In fact, the CMA said its investigation found that “had iZettle not been taken over, it could have provided strong competition for PayPal, and potentially benefitted customers by driving future innovation and lower prices.”
As a result, PayPal might be forced to stop the part of the transaction that focuses on the companies’ businesses in the U.K., unless it addresses those concerns.
“We are now working to address the CMA’s concerns and demonstrate that the market will remain competitive so we can move forward with integrating iZettle into our global platform,” a PayPal spokesman said, according to the WSJ.
If both companies are not able to address the agency’s concerns, the deal will be moved to an in-depth Phase Two investigation, which will be carried out by a group of independent CMA panel members.
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