The decision is conditional upon the divestment of PaySquare's Belgian subsidiary and the respect of certain obligations related to the licensing of Worldline's Poseidon software, which is used in the provision of merchant acquiring services in Germany.
The transaction combines two large payment systems operators, active across the full value chain in both payment processing and card processing services. While the activities of Equens and Worldline are mostly complementary, overlaps arise in a number of Member States including Belgium, Germany, Luxembourg and the Netherlands.
The Commission's investigation
The Commission's investigation revealed two areas in which the transaction would have raised competition concerns:
- Merchant acquiring services in Belgium, where Worldline is the former incumbent and still has a very strong position, whereas PaySquare is a recent entrant that exerts significant price pressure on Worldline. The Commission therefore had concerns that the removal of an important competitive constraint would lead to higher prices.
- Merchant acquiring services in Germany, where Worldline operates the Poseidon software and modules, which are used by a large majority of German network service providers including PaySquare in the provision of these services. There are currently no readily available alternatives to the Poseidonsoftware. The market investigation revealed that, as a result of the transaction, Worldline would have the ability and the incentives to favour its new subsidiary PaySquare, in terms of price and quality, over other network service providers relying on Poseidon. Moreover, the value of licensing Poseidon is a fraction of the value of the merchant acquiring market, thereby making it profitable for the merged entity to discriminate other users than Paysquare in order to gain market share in merchant acquiring.
In order to address the Commission's concerns in Belgium and Germany, the companies submitted remedies, consisting of the divestment of PaySquare's business in Belgium and of granting licenses for the Poseidon software on fair, reasonable and non-discriminatory (so-called FRAND) terms during a period of ten years.
More specifically, the commitments relating to merchant acquiring in Belgium consist of the transfer of:
- customer contracts and corresponding customer data and records in Belgium
- the sales partnership agreements entered into by PaySquare on the market for merchant acquiring services in Belgium and
- key personnel responsible for sales, accounts and commercial product management.
The commitments regarding the Poseidon software (relating to merchant acquiring in Germany)consist of:
- the granting of a license for Poseidon and its modules to third-party network service providers under FRAND terms and capping of the maintenance fees; these terms also apply to maintenance services;
- a monitoring mechanism to ensure compliance with FRAND terms by a licensing trustee and by a group composed of network service providers;
- giving access to the Poseidon source code under certain conditions;
- transferring the governance of the ZVT protocol, on which most German point of sale terminals run, to an independent not for profit industry organisation.
Following a market test, the Commission concluded that these commitments remedy the competition concerns raised. The decision to approve the transaction is conditional upon full compliance with the commitments.
Companies and products
Worldline, based in France, is a company active as a payment services and terminals provider, financial processing and software licensing provider and e-transactions service provider. Worldline is the historical operator for payment service and terminals in Belgium and in France, but it is also active in other Member States across the EEA. It is owned by Atos, also based in France.
Equens, based in the Netherlands, offers numerous services across the value chain of both payments processing and cards processing services. Its fully-owned subsidiary PaySquare provides merchant acquiring services in Belgium, Germany, Luxembourg, the Netherlands, Poland, Switzerland and the United Kingdom.
The case was notified to the Commission on 26 February 2016.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in case remedies are submitted by the Parties, such as in this case.