The UK Competition and Markets Authority (CMA) has found that MasterCard's planned £700m acquisition of UK-based VocaLink may reduce competition in the supply of ATM network services in the country.
MasterCard and VocaLink offer services to the LINK ATM network, which represents nearly 70,000 cash machines across the UK and Europe.
VocaLink manages Bacs, the UK’s automated clearing house network that allows credit and debit payments between bank accounts. It also operates the country’s Faster Payments Service (FPS) for real-time account-to-account payments via online systems, mobile devices, and telephone.
The CMA said that the merger of MasterCard and VocaLink would put two of the country’s three leading ATM network-services suppliers under one corporate roof, which will decrease the number of bidders and limit the ability of the Link scheme to achieve good value when tendering for an infrastructure provider.
The CMA acting CEO Andrea Coscelli said: “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.”
With respect to Bacs and FPS, the competition watchdog has not found concerns in the provision of payment infrastructure services, as there are numerous credible alternatives to VocaLink and MasterCard.
Furthermore, the CMA said that the companies can avoid the merger being referred for an in-depth investigation if they can provide a remedy to address the competition concerns identified.
It has given MasterCard and VocaLink until January 11 to propose a remedy to its concerns before launching a full investigation.
Commenting on decision of the CMA, MasterCard said: “We welcome today’s decision by the Competition and Markets Authority (CMA), regarding our planned acquisition of VocaLink. The thoroughness of the CMA’s review reflects the significance of this deal and its potential for the industry.”