Press release

Competition concerns over Mastercard/VocaLink merger

The CMA has found that Mastercard’s acquisition of VocaLink gives rise to competition concerns.

Cash machine image

Mastercard UK Holdco Ltd, a subsidiary of Mastercard International Incorporated (Mastercard), is buying VocaLink Holdings Ltd (VocaLink). It already owns and operates credit and debit card schemes Mastercard, Maestro and Cirrus, and has also bid to supply infrastructure services to UK interbank payment systems.

VocaLink is a supplier of payment infrastructure services to 3 major UK interbank payment systems: Bacs, the automated clearing system allowing credit and debit payments between bank accounts; the Faster Payments Service (FPS), which enables near ‘real-time’ payments between bank accounts within the UK; and the LINK ATM network.

The Competition and Markets Authority (CMA) has assessed the merger in the context of an ongoing review by the Payment Systems Regulator (PSR) into the ownership and competitiveness of infrastructure that supports the 3 major UK payment systems. The PSR has made a series of recommendations intended to improve competition in payment systems.

A number of industry participants have raised concerns with the transaction and the CMA investigated a number of theories of harm including loss of competition in payment infrastructure services to Bacs, FPS and LINK ATM scheme.

In relation to LINK ATM, the CMA found that VocaLink and Mastercard are 2 of the 3 most credible providers of infrastructure services to the LINK ATM network operating across the UK. As such, the merger would reduce the number of bidders and limit the ability of the LINK scheme to obtain good value when tendering for an infrastructure provider.

The CMA has not found concerns in the provision of payment infrastructure services to Bacs or FPS since there are many credible alternatives to VocaLink and Mastercard.

The companies can avoid the merger being referred for an in-depth investigation if they can offer a remedy to address the competition concerns identified. They have until 11 January 2017 to do so.

Andrea Coscelli, Acting Chief Executive of the CMA, and decision maker in this case, 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.

Notes for editors

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn and like our Facebook page. Sign up to our email alerts to receive updates on mergers cases.
  2. Central infrastructure services include software and hardware provision, as well as secure telecommunications networks and operating environments that support the clearing and settlement of payments.
  3. The CMA found no competition concerns in relation to other areas such as gateway solutions and data analytics and the potential rivalry between Mastercard and Zapp, VocaLink’s mobile payment app. The CMA also received a number of concerns relating to Mastercard’s ownership of the central infrastructure used by the payment systems and their ability to harm rivals in the supply of ATM switching services and payment methods that compete with Mastercard and, in each case, the CMA did not consider there to be sufficient evidence to demonstrate that Mastercard would have either the ability or incentive to foreclose its rivals in the future.
  4. In July 2016, the PSR published the final findings of its market review into the ownership and competitiveness of infrastructure that supports the 3 major UK payment systems: Bacs, FPS and LINK.
  5. Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a merger reference, resulting in an in-depth phase 2 merger investigation, if the CMA believes that it is or may be the case that a ‘relevant merger situation’ has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and that the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
  6. Under the Act a ‘relevant merger situation’ is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
  7. The CMA considers that it is under a duty to make a phase 2 merger reference in this case under the Act. However, the duty to refer is not exercised while the CMA is considering whether to accept undertakings in lieu of a reference. MasterCard has until 11 January 2017 to offer undertakings that might be accepted by the CMA. If no undertaking is offered or accepted, then the CMA will refer the merger for a phase 2 merger investigation.
  8. All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision makers on merger investigations. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
  9. The text of this decision will be placed on the case page in due course.
  10. Media enquiries should be directed to Rory Taylor ( or 020 3738 6798).
Published 4 January 2017