CMA voices concerns over VocaLink’s takeover by Mastercard
CMA is not happy
The Competition and Markets Authority (CMA) has found that Mastercard’s acquisition of VocaLink gives rise to competition concerns.
Mastercard already owns and operates credit and debit card schemes Mastercard, Maestro and Cirrus, and has also bid to supply infrastructure services to UK interbank payment systems.
VocaLink is a supplier of payment infrastructure services to three major UK interbank payment systems: Bacs, the automated clearing system allowing credit and debit payments between bank accounts; the Faster Payments Service (FPS), which enables near real-time payments between bank accounts within the UK; and the LINK ATM network.
A number of industry participants have raised concerns with the transaction and the CMA investigated a number of theories of harm including loss of competition in payment infrastructure services to Bacs, FPS and LINK ATM scheme.
No concerns were found in the Bacs or FPS areas – “since there are many credible alternatives to VocaLink and Mastercard” – according to the CMA, but the LINK ATM is another matter.
“In relation to LINK ATM, the CMA found that VocaLink and Mastercard are two of the three most credible providers of infrastructure services to the LINK ATM network operating across the UK,” the authority states. “As such, the merger would reduce the number of bidders and limit the ability of the LINK scheme to obtain good value when tendering for an infrastructure provider.”
Andrea Coscelli, acting CEO of the CMA, and decision maker in this case, comments: “The LINK ATM network provides an essential service for millions of customers. It’s important that LINK has a good choice of providers when it comes to supplying the necessary infrastructure so it can take advantage of the opening up of payment systems to competition. These concerns warrant a closer investigation in the event that Mastercard cannot address them at this stage.”
The CMA says if Mastercard and VocaLink can offer a remedy to address the concerns, their merger plans will not be referred for an in-depth investigation.
The two companies have until 11th January 2017 to do so.
Mastercard says it is “pleased to have the opportunity” to address the LINK ATM related concerns of the CMA and will do so in the timeframe provided.
It insists that the VocaLink acquisition “promises to bring greater choice and innovation to the payment ecosystem, enabling people, governments and businesses to pay the way they want to pay”.
