Earlier this month, the Competition and Markets Authority (CMA) announced that Mastercard UK Holdco Ltd’s - a subsidiary of Mastercard International Incorporated (Mastercard) - purchase of VocaLink Holdings Ltd (VocaLink) would face an in-depth investigation, unless the companies could address the CMA’s competition concerns over the deal.
In particular, the CMA found that VocaLink and Mastercard are 2 of the 3 most credible providers of infrastructure services - which include software and hardware provision, as well as secure telecommunications networks - to the LINK ATM network. As such, the merger would limit the ability of the LINK scheme to obtain good value when tendering for an infrastructure provider.
Mastercard and VocaLink have proposed remedies to the CMA which could address its competition concerns by reducing the cost to LINK of switching from VocaLink to alternative suppliers of infrastructure services. The proposed package of remedies include:
VocaLink making its connectivity infrastructure available to a new supplier of infrastructure services to LINK. This could allow a competitor to use VocaLink’s connectivity to members of the LINK ATM network, rather than having to build their own.
VocaLink transferring or licensing to LINK the intellectual property rights relating to the LINK LIS5 messaging standard, which members of the network use to communicate when customers use cash machines.
VocaLink contributing to LINK members’ switching costs.
The CMA has decided that there are reasonable grounds for believing that these proposals, or a modified version of them, might be acceptable to remedy the competition concerns it has identified.
The CMA has until 15 March 2017 to consider whether to accept the undertakings, although the CMA may decide to extend this deadline to 15 May 2017 if it decides that there are special reasons for doing so.
As part of its process, the CMA will undertake a public consultation.
If the CMA does not accept the undertakings proposed, the merger will be referred for an in-depth investigation.
The full text of the decisions will be published shortly on the investigation case page.