ACCC may oppose merger of BPAY, eftpos and New Payments Platform

The competition regulator may oppose proposed merger of BPAY, eftpos and the New Payments Platform.

The ACCC is considering the proposed merger of BPAY, eftpos and the New Payments Platform.

The competition regulator has dealt a blow to the major banks and retail giants Woolworths and Coles over their proposed merger of BPAY, eftpos and the New Payments Platform, indicating it may oppose the deal on competition concerns.

Releasing its preliminary views on the merger on Friday, the ACCC said it was considering whether the proposed merger would result in “a substantial lessening of competition” arising from reduced incentives between the parties to compete where their services overlap or are likely to do so in the future.

The removal of competition between BPAY, eftpos and NPP in relation to their payments infrastructure is also under consideration, as is a reduction in eftpos’ capability. The potential for third-party access to the NPP being denied or frustrated is another factor in its decision, the ACCC said.

“At this stage, the ACCC is not satisfied that the proposed amalgamation will not result in a substantial lessening of competition in a market or markets relating to payments services or infrastructure,” the competition regulator warned.

BPay, eftpos and NPP are owned by the major banks, while Coles and Woolworths are eftpos shareholders. The parties agreed to merge in December with a view to completing the deal in the second half of 2021.

Several stakeholders had commented on the level of existing and potential future competitive overlap between the amalgamating entities, the ACCC said.

But the industry committee overseeing the merger on behalf of the three parties, the ICA, told the regulator that the payment schemes “own and operate largely complementary assets and do not offer services that are close substitutes for each other”.

The proposal has raised concerns among retailers and small businesses, with COSBOA chief executive Peter Strong in his submission arguing that “over time, competition in the financial services of payments would be significantly reduced by this merger.”

Chief among the concerns is the Least Cost Routing initiative, which helps merchants reduce transaction fees.

The ACCC said it was assessing concerns that the LCR initiative may be neglected or abandoned if the merger goes ahead.

“The ACCC’s preliminary view is that the proposed amalgamation is likely to result in some of the claimed public benefits, but the extent and significance of those claimed public benefits is unclear,” the regulator said.

The regulator is due to make a determination on the merger by July 30.