Commerce Commission declines clearance application for epay to acquire Ezi-Pay
Published15 Jun 2012
The Commerce Commission has declined an application from epay for clearance to acquire Ezi-Pay.
The Commerce Commission has declined an application from epay for clearance to acquire Ezi-Pay.
epay and Ezi-Pay both act as distributor-agents for a range of pre-paid products, including pre-paid mobile phone top-ups, calling cards, gift cards, digital content and pre-paid electricity.
"While the Commission is satisfied that the proposed acquisition will not have, or would not be likely to have, the effect of substantially lessening competition in four of the relevant markets, the majority is not satisfied that the same is true for a fifth market - the distribution and in-store payment processing of pre-paid mobile phone top-ups," said Commerce Commission Chair Dr Mark Berry. "This being the case, we must decline the application."
The four markets in which the Commission is satisfied that the proposed acquisition will not have, or would not be likely to have, the effect of substantially lessening competition are the markets in New Zealand for the:
distribution and in-store payment processing of calling cards
third-party distribution and in-store payment processing of gift cards
distribution and in-store payment processing of digital content
distribution and payment processing of pre-paid electricity.
In terms of the market for the distribution and in-store payment processing of pre-paid mobile phone top-ups, the Commission's decision was not unanimous. Two of the three Division members were not satisfied that the proposed acquisition will not have, or would not be likely to have, the effect of substantially lessening competition in that market.
When considering a proposed merger, the Commission must decide whether any loss of competition is substantial. In the market for the distribution and in-store payment processing of pre-paid mobile phone top-ups, the majority of the Division are not satisfied that the proposed merged entity would be sufficiently constrained by other factors, such as:
expansion of existing competitors
mobile phone companies persuading consumers to switch to topping-up direct
direct integration between mobile phone companies and large retail outlets (eg, supermarkets)
new entry
countervailing power of mobile phone companies.
The Commission will be making no further comment until the written reasons are available.
The application involves epay New Zealand Ltd acquiring Ezi-Pay Ltd. The acquisition will also include certain assets of Compass Communications and the assets or shares of EFTDATA Holdings Ltd. The latter two companies have the same shareholders as Ezi-Pay Ltd.
Assessing an application for a merger or acquisition
When considering a proposed merger, the Commission must decide whether there is a lessening of competition and, if so, whether it is substantial. We can only give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.
