MEP Ashley Fox questions the cooperation of EBay with the micropayment service Paypal from Luxembourg:
Parliamentary questions 4 February 2011 E-000840/2011
Question for written answer to the Commission Rule 117 Ashley Fox (ECR)
Subject: eBay’s contract with PayPal
Please could the Commission clarify whether the monopolistic relationship between eBay and its payment mechanism ‘PayPal’ contravenes the European Union’s Monopolies Commission rules? If so, please could the Commissioner inform me as to what steps the Commission is taking to open the eBay marketplace to alternative sources of Internet payment methods?
E-840/11EN Answer given by Mr Almunia on behalf of the Commission
The Commission would refer the Honourable Member to its answer to written question E-7823/10 by Mr Watson.
And as a footnote:
Quite impolite. The Commission assumes the MEP was not aware of the question of Watson.
The use of electronic money (e-money) is growing significantly and the recent E-Money Directive (2009/110/EC)(1) aims to enable new, innovative and secure electronic money services to be designed, and to foster effective competition between all market participants in this sector.
Online action site eBay has become a major marketplace for goods across the UK and throughout the EU. Is the Commission aware, however, that users of eBay’s UK site must agree to the possibility of purchasers’ making payment via PayPal?
Tying all sellers to accepting Paypal will undoubtedly put pressure on competitor systems such as Google Checkout, Wirecard, Moneybookers, and 2Checkout.com. This appears to run counter both to the aims of Directive 2009/110/EC and to Article 101 of the Treaty on the Functioning of the European Union, under which (with limited exceptions) agreements between two or more firms that restrict competition are prohibited.
(1) OJ L 267, 10.10.2009, p. 7.
Here the Commission (Mr Almunia) answered:
Parliamentary questions 8 November 2010 E-7823/2010
The Commission would like to inform the Honourable Member that it is aware that sellers on eBay.co.uk site must agree to the possibility of including PayPal´s service as one of the payment options. However, whether or not this constitutes a violation of EU competition law depends on a range of factual, legal and economic issues.
The scope of Article 101 of the Treaty on the Functioning of the European Union (TFEU) is limited to those agreements restricting competition, which are entered into by independent undertakings. It does not cover agreements or concerted practices between entities belonging to the same corporate group. The payment service provider PayPal is a wholly owned subsidiary of eBay and therefore Article 101 TFEU is not applicable to its agreements with eBay.
Unilateral anticompetitive conduct can be sanctioned under Article 102 TFEU provided that a company is dominant on the relevant market. At the moment the Commission is not in possession of evidence that would allow it to make conclusions on the market power of companies active in the relevant market.
The Commission would like to assure the Honourable Member that it remains committed to ensuring the full respect of European competition rules. The Commission will therefore monitor the market situation carefully.
Obviously that does not answer the question of the MEP and seems to contradict the single market objective. It is odd to watch the protectionism of the Luxembourg company from competition enforcement and their borderline consumer relations and service practices without sanctions by the Luxembourg authorities. All this in the context that the European Union says they want to tighten rules on financial services. At least this provider of cross-border services seems to receive special treatment which enables them to contravene the usual modes of operation.