28. maj 2014
On 4 December 2012, the Danish Competition and Consumer Authority (DCCA) conducted a dawn raid on the company Nets Holding A/S (“Nets”) in light of a complaint regarding anti-competitive behavior in the Danish market for payment cards.
Nets is active on a upstream market for processing services and Teller (a Nets subsidiary) active on a downstream for acquiring international payment cards.
The dawn raid led to concerns about the fact that Nets has potentially conducted an illegal margin squeeze on the Danish market for acquiring international payment cards through pricing on the upstream market for processing of payment card transactions through Nets’ infrastructure (upstream) and Teller’s pricing in the acquiring market (downstream). Furthermore, Nets has potentially set excessive prices on some upstream processing services to a number of the acquirers that are downstream competitors to Teller. The case is settled with commitments.
Nets is the central player in Denmark regarding payment transactions and handles the central payment card infrastructure in Denmark. This entails that acquirers of international payment cards in practice have to buy certain processing (front-end acquiring processing, FAP) services from Nets in order to acquire international payment card transactions in Denmark. Nets’ subsidiary Teller is by far the largest acquirer in Denmark regarding international payment cards.
The DCCA has made a preliminary analysis of whether
- Nets’ services regarding FAP were objectively necessary for Teller’s competitors in the retail market.
- There was a discrepancy between the prices of Nets’ wholesale products and Teller’s prices in the retail market leading to a potential margin squeeze.
- If Nets’ FAP wholesale price could be seen as excessive pricing.
Nets has offered commitments to abstain from an illegal margin squeeze in violation of section 11 of the Danish Competition Act and article 102 of the EC Treaty, including:
- Introduction of a new wholesale price model concerning FAP services that will apply to all acquirers including Teller. The new price model reduces the average price charged for FAP significantly in particular for certain competitors to Teller.
- Providing all of Teller’s acquiring customers an extraordinary termination right during the first three months of the commitments and without imposing any costs on those acquiring customers that make use of this possibility.
It is the DCCA’s assessment that the commitments offered by Nets eliminate the concerns regarding a potential abuse of a dominant position and that Teller’s competitors in the market for acquiring international payment cards will be able to compete on equal terms with Teller under these commitments.
For further information contact Head of Division, Martin Nyvang, at +45 4171 5190.