PayPal must pay a fine to the U.K.’s top financial watchdog for failing to keep its operations completely separate from iZettle while authorities investigated competitive effects of PayPal's purchase of the Sweden-based mobile POS provider.
PayPal's $2.2 billion deal to buy iZettle — positioning it to
PayPal has agreed to pay a penalty of £250,000 (US$312,000).
PayPal finalized its deal to buy iZettle in September 2018, paying a premium of about twice iZettle's valuation, and vowing to cooperate with the CMA's ongoing investigation of potentially unhealthy competition the merger could pose. CMA gave
But CMA said PayPal violated the rules by marketing its services to up to 76 prospective European merchant customers in the interim, before receiving final approval from CMA.
“CMA imposed the penalty for failures to comply, without reasonable excuse, with the requirements imposed on PayPal by the initial enforcement order,” the watchdog organization said in a statement on its website.
A PayPal spokesperson said that between November 2018 and April 2019, PayPal conducted pilot email campaigns, contacting some of its French and German customers to promote iZettle’s card reader, which the CMA said created the perception that PayPal and iZettle were officially integrated within the U.K.
“While we respectfully disagree with the CMA’s conclusions, we understand the importance of Initial Enforcement Orders in the U.K.’s merger control regime and treated compliance with [the order] with the utmost importance throughout the merger review,” PayPal said in a statement.
Purchasing iZettle has enabled PayPal to significantly expand its merchant base in Europe and Latin America.
Launched in 2010, iZettle reaches 12 global markets, with a strong presence in the U.K, Brazil and Sweden. Its acquisition puts PayPal into direct competition with Square in several of those markets.
Square
