• Martorano Law

UK Antitrust Authority imposes record fine on PayPal for practice during the acquisition of iZettle

Atualizado: 26 de Set de 2019

The £ 250,000 fine was imposed after the company engaged in integration activities with iZettle before the authority decided on the transaction.


On September 24, the UK Competition and Markets Authority (CMA) fined PayPal in £ 250,000 after the company violated an interim enforcement order (IEO) imposed by the antitrust authority during the merger review procedure relating to the acquisition of iZettle in the mobile point of sale devices market. The decision was published after the transaction clearance, given the independence between merger review and investigations for gun jumping-related practices.


After the transaction was notified in 2018, the British authority had ordered the suspension of any integration practices involving the businesses located in the UK until final decision. Taking into account the transaction international aspect, activities relating to foreign markets were allowed provided that they did not affect the domestic market.


PayPal, however, violated the IEO by launching joint sales pilot campaigns in France and Germany without proper handling of target companies with business units in the UK, thereby precipitously exposing British customers to the effects of the operation.


According to the CMA, the activity had the potential to undermine the ongoing analysis and the company provided no reasonable justification that could rule out illegality.


As set out in the Penalty Notification, even though the penalty is the highest ever for a single breach, it is the lowest proportionately to PayPal's gross turnover (approximately 0.002%) and was intended to reflect the seriousness of the violation and to achieve general deterrence.


Context


The penalty was the highest ever imposed by the CMA for a single breach of interim orders in merger review and is part of the increasing gun jumping control by antitrust authorities both in the UK and other jurisdictions.


In Brazil, with the exception of the Technicolor/Cisco case - in which a R$ 30 million fine was imposed on the parties in 2016 - the average gun jumping penalty imposed by the Brazilian Antitrust Watchdog (CADE) is R$ 1 million.


However, it is noteworthy that the Brazilian Competition Law provides that the gun jumping fine can range from R$ 60 million to R$ 60 million and applies to both (i) notifiable transactions that are not submitted to CADE or (ii) transactions that, once submitted to CADE, are concluded without the authority's consent.

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