A series of sharp questions from the ACCC for the proponents of the amalgamation of BPAY, eftpos and the New Payments Platform sheds light on the discussions that will see this new force in payments prosper, falter, or – as seems likely – shelved and reconsidered.
A letter from the ACCC to the Industry Committee Administration, published last Friday, adds context to the matters outlined in the competition regulators’ Statement of Preliminary Views, reported by Banking Day on Monday.
In this summary of its views the ACCC said it was “not satisfied that the proposed amalgamation will not result in a substantial lessening of competition in a market or markets relating to payments services or infrastructure”.
Over the six weeks left for the ACCC to reach a final position on the ICA’s application for merger authorisation, the ACCC is seeking a thorough understanding of the governance, strategic priorities and especially pricing powers in relation to what, in the jargon of this merger, are known as Operating Companies, or OpCos.
In other words, BPAY, Eftpos and NPP Australia in their post-merger colours.
In the covering letter to ICA, the ACCC takes a testy tone:
“We request that a greater level of detail is provided in your public response to these questions on changes in governance and control than has previously been provided in respect of these issues,” Daniel McCracken-Hewson, the ACCC’s general manager of merger investigations wrote.
In the letter the ACCC show they are digging deep and, on Banking Day’s reading, taking an antagonistic approach.
“If there were to be a NewCo business case for rationalising payment rails (e.g. shutting down some eftpos or BPAY infrastructure in the long term), explain the decision-making process and any Board or shareholder/member resolution process that would be required in order to implement this,” the ACCC asks.
The ACCC is demanding explanations of the decision-making power of each OpCo and their decision-making processes, including:
What types of matters will each OpCo be responsible for?
What types of decisions will each OpCo be able to make, including (but not limited to) decisions with respect to the development of the OpCo’s roadmap and the inclusion of a particular payment service in its roadmap?
Whether the decisions will be made by way of resolution of the Board of directors of the OpCo, including the applicable majority requirements.
Whether the decisions will be made by the OpCos independently from NewCo.
Who has the ability to change the governing rules, scheme rules and/or constitution of each OpCo?
“If any of the decisions identified in response to question 2 above are not made by the OpCo independently from NewCo, please explain the extent of control or influence, either legal or de facto, NewCo will have in relation to these decisions,” the ACCC demands.
“Please explain how the OpCos will make decisions in relation to the pricing of services:
Will the NewCo Board have any control over or exert any influence on the OpCos’ decisions in relation to the pricing of services?
Will the NewCo Board make pricing recommendations or provide pricing guidance to the OpCos in relation to