Listed French payments group Ingenico struck a deal to acquire Kiwi payment network Paymark for $190 million in January this year. The Commerce Commission is working towards a decision on whether or not to grant clearance to the proposed merger, and has now released a statement going over preliminary issues.
The Commerce Commission will only give clearance to the merger once it’s satisfied this will not have the effect of substantially lessening market competition in New Zealand.
Among the issues it’s currently considering are whether the proposed merger will raise vertical effects, which may increase the post-merger Paymark’s ability to foreclose its rivals. One way it could potentially do this is by making it harder or more costly to gain access to Paymark’s switch or related services. Firms vulnerable to this might supply terminals in competition with Ingenico or provide digital gateway services in competition with Paymark and Bambora.
Ingenico has argued that the proposed merger does not raise any vertical concerns as rivals for the supply of terminals could use a rival switch. It would not be in the interests of post-merger Paymark to engage in conduct like the above as any profits gained in the supply of terminals would not exceed the lost profits from reduced switch transactions.
The Commerce Commission intends to make a decision on whether or not to give clearance to the merger by 19 June.
Anyone interested in commenting on the likely competitive effects of this merger can make a submission to the Commerce Commission by May 4. Details on how to do this, and more details on the merger, can be found at the Merger Clearances Register.