The UK’s competition regulator is to review the $2.2bn merger of US payments company PayPal and Swedish start-up iZettle.
In an initial enforcement order issued on Thursday, the Competition and Markets Authority said it would consider whether the merger, which formally completed on the same day, would lead to “a substantial lessening of competition in any market or markets in the United Kingdom”.
Such orders are issued regularly by the CMA and do not necessarily signal a formal investigation, though moving to the first stage of its merger review process is believed to be likely in this case.
Although the deal is complete, the enforcement order means the merged entity must freeze any actions that lead to further integration or “otherwise impair the ability of [the two business] to compete independently”, the watchdog said.
The CMA did not give a timetable for its initial review of the merger.
PayPal’s purchase of iZettle was announced in May and came just before the Swedish company, which is focused on Europe and Latin America, was due to hold an initial public offering. The $2.2bn price tag was about double the valuation iZettle had bee aiming for.
Announcing the merger’s completion, Bill Ready, PayPal’s chief operating officer, said: “We’re thrilled to welcome the iZettle team to the PayPal family and are excited to expand the ways we serve our small business customers.”
PayPal added it was “working cooperatively with the CMA as it conducts its review. PayPal and iZettle brands and operations will be held separate as agreed with the CMA, pending completion of the CMA’s review”.
It added that the review “does not impact the close of the transaction”.
The CMA’s intervention comes shortly after the UK government hired Jason Furman, a Harvard professor and adviser to former US president Barack Obama to lead a “digital competition inquiry” that will examine the role and dominance of big tech companies.
Andrew Tyrie, who chairs the CMA, said at the time of Mr Furman’s appointment that the regulator was putting digital markets “much higher up its agenda”.