The Competition Authority has approved the merger of Rapyd and
Valitor's with conditions as set out in the decision of the Competition Authority No. 13/2022, Merger of Rapyd and Valitor, which is published today. With that,
The Competition Authority has concluded its investigation into the acquisition of Rapyd Financial Network
Rapyd (2016) Ltd. („Rapyd“) owns all the shares in Valitor hf. („Valitor“).
Subsidiary company
Rapyd is Rapyd Europe hf., formerly known as Korta hf., which operates
payment services activities, among other things, in this country, such as Valitor. With
As part of the transaction, Rapyd intends to merge the operations of Valitor and Rapyd Europe Ltd.
The merger primarily affects the markets for
transaction processing by Icelandic resellers, i.e. for on-premises transactions at
in Iceland (regardless of the settlement currency) and for online transactions settled in Icelandic
crowns.*
It is
the conclusion of the investigation that if Rapyd's proposed acquisition of Valitor had gone ahead
Had it proceeded unchanged and without intervention, the market share of the combined company would have been
between 70-75% for vehicle retention by Icelandic dealers.** The merger would therefore have led
to a decisive market-dominating position of the combined company or, as the case may be
strengthening of Valitor's potential dominant market position. Believes
The competition authority that the merger parties are close competitors in the market and that
that significant barriers to entry exist. In the opinion of the Competition Authority
if the merger would have been likely to prevent effective competition within the meaning of competition law.
In operation
In the matter, the merging parties responded to the Competition Authority's preliminary assessment by requesting
after negotiations on a settlement in the matter and propose measures to eliminate
the merger's harmful effects on competition. The talks led to Rapyd making
an agreement with the Competition Authority regarding certain measures.
In the operations
includes, among other things, Rapyd's commitment to sell
a diverse portfolio of maintenance contracts to a qualified buyer corresponding to a higher
market share in the main market concerned, but Rapyd Europe hf.'s market share.
With the sale, the market share of the combined company also falls significantly.
for 50%.
During
During the proceedings, the merger parties initiated a sale process aimed at this and made
we enter into an agreement with Kvika banki hf. („Kvika“) for the purchase of a diverse portfolio
maintenance agreements.
This entails that Rapyd has committed to preventing
a way for the consolidation that the merger would have led to. Does the sale also create
conditions for a new entrant, Kvika, which already provides payment-related services
under the brands Netgíró and Aur, to establish themselves in
mobile phone markets and compete with retailers for business.
Páll Gunnar Pálsson, CEO
The Competition Authority:
„Effective competition in
The payment card and payment services market is of great importance and has an impact on
Price of goods and services to consumers in Iceland.
It is therefore significant that all those involved in this matter ensure that they
Conditions for Rapyd's acquisition of Valitor are met
its own. This would create the groundwork for positive changes in this area,
for the benefit of consumers.“
In the settlement with
Rapyd contains detailed conditions which are intended to ensure that the collection of agreements which
A diverse range is sold, including in terms of size and industry distribution.
of the vendor. At the same time, the conditions are intended to prevent unfairness.
for clients in debt collection (agents), but by its very nature will
not infringing on their right to choose a service provider for conveyancing, that
taking into account existing agreements.
Rapyd will
temporarily provide Kviku with services, particularly in the field of technical implementation and
settlement with the international card schemes. This service also includes
that Kvika can operate temporarily on the basis of the merger party's main licences from
the international mapping systems. This contributes to the transfer
the business relationship and Kviku's subsequent service to the seller
seamlessly for itself during the transition period.
In order to
To ensure that these plans succeed, Kvika has also reached an agreement with
The competition authority, where the company undertakes, among other things, to
to bring forward its aforementioned service purchases from the merger parties within a specified time limit
to another service provider that is not a major transaction processor in Iceland
in the market. Is this an important step in ensuring lasting competitive advantage?
Independence of Kvika from the merged company.
In connection with the temporary service provided by Rapyd
Kviku, the company has committed to establishing a certain separation and
project separation within the merged company for the purpose of counteracting that
could use sensitive business information about Kviku's operations for their own
of progress. Rapyd is then prohibited from repurchasing the sold contracts for 10 years and
It is prohibited to compete for business with the seller in the contracts sold in
for a specified period after Kvika's temporary service purchases expire.
Implementation
The merger is subject to the fulfilment of certain conditions. Upon publication
The determination of this lies in the fact that these reservations can be considered fulfilled.
In the decision
The Competition Authority provides a detailed account of its investigation into the case and its findings.
Among other things, the conditions for the merger and the settlement are discussed.
of the Competition Authority against Rapyd. The decision also sets out the main
The rationale behind the Competition Authority's settlement with Kviku.
The decision is available here.
The Competition Authority
has in recent years researched possible barriers to competition in payment services markets
and has intervened in several cases. The following cases may be mentioned:
–
Decision No. 8/2015.
Intervention concerning Landsbankinn, Arion Banki, Íslandsbanki, Valitor and Borgun, in particular
due to illegal collusion on fees. The companies made a settlement with
The Competition Authority, where the companies admitted to infringements, paid fines to
a total sum of 1,650 million króna and committed themselves to various
changes to the structure and implementation of the payment card market.
–
Decision No. 8/2013.
Intervention concerning Valitor's abuse of its dominant market position. Imposed
administrative fines totalling 500 million króna. The intervention was confirmed in
To the Supreme Court of Iceland, with judgement on the 28th of April
2016.
–
Decision No. 4/2008.
Intervention regarding illegal collusion in the Valitor market (formerly Greiðslumiðlun),
Payment (formerly Credit Cards) and Multi-payment Processing (later the Payment Service Provider)
and Valitor's abuse of its dominant market position. The companies reached a settlement with
The Competition Authority, where they admitted to infringements, paid fines totalling
the sum of 735 million króna, and committed to measures to ensure that
The fragments did not repeat themselves.
* Maintenance of records essentially involves a service that enables the seller to
accept payment cards as payment for transactions and ensures that the seller receives
The amount paid by card is settled with them.
** When assessing market share in the case, the Competition Authority took into account the effects
that several major suppliers made agreements to move service purchases
to Valitor or Rapyd in the latter half of 2021. This had
a significant impact on the valuation of Valitor's stake, and Rapyd's stake also increased as a result.
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