According to market studies, PayPal is not only the leading online payment scheme in Germany but also one of the most expensive online payment services


PayPal headquarters in San Jose, California, US. (Credit: Sagar Savla/Wikipedia)

The Bundeskartellamt has initiated a proceeding against PayPal (Europe) S.à.r.l. et Cie, S.C.A. on account of practices possibly foreclosing competitors and restricting price competition. The proceeding deals with PayPal’s “Rules about surcharging” and the “Presentation of PayPal” set out in its user agreement applicable in Germany.

Under these terms and conditions merchants are not allowed to offer their goods and services at lower prices if customers choose to use a payment method that is cheaper than PayPal. In addition, sellers are not allowed to express a preference for payment methods other than PayPal or, for example, make their use more convenient for customers.

Andreas Mundt, President of the Bundeskartellamt: “These clauses might restrict competition and violate the prohibition of abuse of a dominant position. We will now assess the extent of PayPal’s market power and in how far online sellers depend on offering PayPal as a payment method. If merchants are prevented from taking into account the differences in costs of various payment methods by imposing surcharges or granting discounts, it is more difficult for other and new payment schemes to compete successfully in terms of price and quality or to enter the market in the first place. Powerful payment schemes could thus obtain additional pricing leeway. Consumers in particular would also suffer since in the end they are the ones indirectly paying for these higher costs via the products’ prices.”

The fees incurred by sellers for the use of a payment service differ considerably depending on the payment scheme. Sellers usually include these fees in the product prices so that ultimately consumers bear the costs incurred for payment services even if these costs – unlike shipping costs, for example – are often not separately charged to consumers.

According to market studies, PayPal is not only the leading online payment scheme in Germany but also one of the most expensive online payment services. According to the company’s price list, PayPal’s standard rate in Germany currently amounts to 2.49%-2.99% of the payment amount plus 34-39 cents per payment.

The antitrust proceeding is based on the prohibition of abuse of a dominant position (Article 102 TFEU, Section 19 German Competition Act (GWB)) and the prohibition of abuse of a position of relative or superior market power (Section 20 GWB). In addition, PayPal’s conduct might also violate the prohibition of anti-competitive agreements (Article 101 TFEU, Section 1 GWB). The present case thus also ties in with various proceedings already conducted by competition authorities against other online platforms due to so-called most-favoured-nation clauses.

Source: Company Press Release