The ACM advocates a level playing field for all providers of payment services, both now and in the future, and indicates that stricter European rules would be welcome.
The Netherlands Authority for Consumers & Markets (ACM) recently conducted a study into the role of large technology companies on the Dutch market for (online and offline) payment services. The results were published on 1 December 2020. Based on this study, the ACM is calling for adjustment of the current competition rules in order to ensure a level playing field for payment service providers.
The study focused on a number of Big Tech companies, specifically Apple, Amazon, Ant Group (Alibaba), Facebook, Google and Tencent. It provides an overview of current and expected developments in the activities of these companies and concludes that while their presence on the Dutch market for payment services has been limited until now, it is steadily growing.
The ACM finds that the encroachment of Big Tech on the payment services market gives rise to certain risks. Big Tech companies are strengthening their market position through acquisitions and partnerships. To prevent market dominance, the ACM wants to force such companies to open up their technology and platforms to competitors. In this context, the ACM is mainly referring to Apple, since Apple Pay can only be used with a compatible iPhone or Apple Watch. Moreover, banks must sign up to Apple Pay in order to allow their customers to pay with their handheld devices. The ACM believes it is important for Big Tech companies to ensure that their platforms and devices are suitable for use by all payment service providers. Only with a level playing field can payment service providers continue to compete and innovate and consumers retain freedom of choice.
The ACM states that the PSD2 Directive could be amended in order to ensure a level playing field. This directive does not cover tech companies that facilitate payment services, as such companies are often classified as providers of a technical service rather than payment service providers. The ACM therefore recommends amending the directive so that these types of companies are covered. The ACM further considers certain companies to be gatekeepers for online payments. Without further regulation, the ACM fears that this gatekeeper function could allow them to restrict competition and thus limit consumer choice.
The ACM indicates that ex ante conditions could be included in the competition rules so as to require dominant platforms to open their 'walled gardens' to others. On 15 December 2020, the European Commission presented two proposals relating to similar concerns, the Digital Services Act, which aims to increase transparency on the part of platforms and improve consumer safety, and the Digital Markets Act, which defines 'digital gatekeepers' and creates additional obligations for entrenched companies that, due to their size and role, hold the keys to the digital markets. For more information on the Digital Markets Act, please see our blog post on the subject.
The ACM's market studies and announcements show that the digital economy is still high on its list of priorities. Indeed, the ACM has also conducted a market study of mobile app stores and launched an investigation into Apple's App Store. In addition, on 4 December 2020, the ACM announced that it had initiated an investigation into the access of payment apps to Near Field Communication (NFC), thereby indirectly targeting Apple and its Apple Pay system. The ACM's recent market study and NFC investigation demonstrate that the regulator continues to prioritize the digital economy, in all its forms, and make clear its preference for ex ante regulation (see our 2019 blog post). Overall, the study conveys the same message the ACM has been spreading for a few years now: platforms, including payment platforms such as Apple Pay, should be accessible to competitors and other users. Therefore, neither the results of the study nor the investigation into NFC should come as a surprise.
Please do not hesitate to contact us if you would like more information on competition law and the digital economy, the ACM's activities and/or the European Commission's focus in this area.