Merger of Rapyd and Valitor

The Competition Authority has concluded its investigation into the acquisition by Rapyd Financial Network (2016) Ltd. („Rapyd“) of all shares in Valitor hf. („Valitor“). Rapyd's subsidiary is Rapyd Europe hf., formerly Korta hf., which operates in payment services, among other places, in Iceland, just like Valitor. Through the transaction, Rapyd intends to merge the operations of Valitor and Rapyd Europe hf.

The merger primarily affects the settlement services markets for Icelandic merchants, i.e. for point-of-sale transactions in Iceland (regardless of the settlement currency) and for online transactions settled in Icelandic krónur.

Settlement negotiations on remedies to eliminate the harmful effects of the merger have led Rapyd to settle with the Competition Authority on specific measures. The remedies include, among other things, Rapyd's commitment to sell a diverse portfolio of transaction processing agreements to a qualified buyer, corresponding to a higher market share in the relevant market than that of Rapyd Europe hf. The settlement with Rapyd contains detailed conditions intended to ensure that the portfolio of contracts sold is diverse, including with regard to the distribution of the number of merchants and their business sectors. At the same time, the conditions are intended to prevent any disadvantage to merchants in payment processing (vendors), as their right to choose a payment processing service provider will, by its nature, not be infringed, taking into account existing contracts.

The purchaser of the agreements is Kvika banki hf. („Kvika“), which is establishing itself in the transaction fee market with the acquisition. In connection with temporary services provided by the combined entity to Kvika, in particular in the field of technical execution and settlement with the international card schemes, Rapyd has undertaken to implement certain separation and divestiture measures within the combined entity to prevent it from using sensitive business information about Kvika's operations for its own advantage. Furthermore, Rapyd is, amongst other things, prohibited from repurchasing the sold agreements for 10 years and from competing for business with the vendors in the sold agreements for a specified period after Kviku's temporary service purchases from them expire.

To ensure that the resolution of the matter achieves the intended outcome, Kvika has also entered into a settlement with the Competition Authority, in which the company undertakes, inter alia, to divest its aforementioned temporary service purchases from the merging parties to another service provider.a. to transfer its aforementioned temporary service purchases for specific timeframes from the merger parties to another service provider that is not a significant payment processor in the Icelandic market. This is an important step in ensuring Kvika's permanent competitive independence from the combined company.