The competition watchdog of the United Kingdom is planning to launch an in-depth probe into the takeover of PayPal of iZettle amid some concerns that it could drive up the prices for the customers.
It had said that its initial probe had “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.” It also urged the firm to offer “acceptable ways” to address the concerns.
The Competition and Markets Authority (CMA) said that it is concerned that the deal could have a negative effect on future competition for mobile payment services. It said that it could likely result in higher prices or lower quality service for the customers.
The CMA had already carried out an initial investigation. It requested Paypal to offer proposals to address the said concerns.
However, on Wednesday, the watchdog said that Paypal was not able to resolve its concerns. It said that it will be referring the deal for an in-depth investigation that will be launched by an independent group of the panel members of the CMA.
A spokesperson for Paypal stated: “Paypal is working cooperatively with the CMA and is committed to demonstrating to the panel of experts that the market is, and will remain, competitive.”
The CMA revealed its intention to investigate the $2.2 billion merger of Paypal with the Swedish financial technology startup on the day that the deal was completed last September.
Paypal swooped in on iZettle, a provider of mobile payment services to small businesses, three weeks after the startup announced its plans for an IPO.
The two firms will continue to operate separately while the CMA undertakes its probe.
Once the deal goes ahead, Jacob Geer, the co-founder of iZettle, will continue to lead the company. He will be reporting to Bill Ready, the chief operating officer of Paypal.