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ACCC proposes to revoke immunity for eBay's PayPal only policy

12 June 2008

The Australian Competition and Consumer Commission (ACCC) has issued a draft notice proposing to revoke a notification lodged by eBay under which the company proposes to make it compolsory for users of the eBay website to use PayPal for almost all transactions.

"The ACCC is concerned that the notified conduct will allow eBay to use its market power in the supply of online marketplaces to substantially lessen competition in the market in which PayPal operates," ACCC Chairman, Mr Graeme Samuel, said today.

"PayPal currently competes with a range of other providers to supply online payment services to users of online marketplaces. If the notified conduct is allowed to go ahead, there will be no competition for the supply of such services to buyers and sellers using eBay.

"Given eBay's position as Australia's leading online marketplace, the notified conduct will substantially reduce competition to supply online payment services to users of online marketplaces more generally.

"The ACCC acknowledges that having PayPal as the only payment provider has the potential to deliver some benefits to users, such as increased buyer protection insurance in certain circumstances. However, the ACCC believes that consumers are in the best position to decide which payment method is most suitable for them.

"The notified conduct denies them that choice. Accordingly, the ACCC considers that these benefits do not outweigh the anti-competitive effects of the conduct," Mr Samuel said.

eBay proposes to implement the conduct in two stages. From 21 May 2008, all sellers on eBay were required to offer PayPal as one of their accepted payment methods. The second stage of the conduct is due to commence on 17 June 2008, with the requirement that all transactions on eBay must be paid for using PayPal or cash on pickup.

eBay and interested parties now have time to lodge submissions in response to the draft notice, before the ACCC decides whether to issue a final notice revoking the notification.

By lodging an exclusive dealing notification with the ACCC, a party obtains immunity from court action for that conduct. In this case, immunity is conferred automatically when the notification is lodged. Once the ACCC receives a notification, it reviews the purpose and effect of the notified conduct. If the ACCC forms the view that the conduct substantially lessens competition, and that it does not deliver a net public benefit, it may issue a draft notice proposing to revoke the notification. After considering any submissions from interested parties in response to the draft notice, and conducting a conference if any of the interested parties call for a conference, the ACCC must decide whether to issue a final notice.

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