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Killer acquisitions and PayPal/iZettle

Stephen Smith and Matthew Hunt

Keywords: Merger; killer acquisition; CMA; technology; Phase II; merger thresholds

In PayPal/iZettle the CMA has, for the first time in a Phase II investigation, directly considered the issue of ‘killer acquisitions’. It assessed whether PayPal's acquisition of iZettle might have been motivated by an intention to prevent future competition from an emerging rival. This article first explores the wider concerns surrounding killer acquisitions, putting the PayPal/iZettle decision in context. It explains the difficulties that some countries face in ensuring that high value acquisitions of innovative start-ups with low revenues are still subject to regulatory control, and the steps that countries like Germany and Austria have taken to resolve this. It then analyses the CMA's decision, highlighting the importance that the CMA placed on the parties’ internal documents for determining the rationale for the transaction and the justification for the amount paid. The article concludes by noting that potential killer acquisitions are likely to remain on the radar of competition regulators (in Europe and the UK) for some time to come.

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