In a press release, dated 23 January 2023, the German Federal Cartel Office (Bundeskartellamt, BKartA) announced that it has initiated a proceeding against PayPal (Europe) S.à.r.l. et Cie, S.C.A. (PayPal), the European subsidiary of the US payment service, on account of practices possibly foreclosing competitors and restricting price competition.
Subject of the proceedings are the "Rules about surcharging" and the "Presentation of PayPal" set out in PayPal’s user agreement applicable in Germany. According to these rules, merchants are not allowed to offer their goods and services at lower prices if customers choose a cheaper payment method. In addition, sellers are not allowed to express a preference for payment methods other than PayPal or, for example, make use of such payment methods more convenient for customers.
Andreas Mundt, President of the BKartA, points out that these clauses might restrict competition and violate the prohibition of abuse of a dominant position. The authority will therefore now assess the extent of PayPal’s market power and how far online sellers depend on offering PayPal as a payment method.
The proceeding is based on the prohibition of abuse of a dominant position (Article 102 TFEU, Sec. 19 German Competition Act (GWB)) and the prohibition of abuse of a position of relative or superior market power (Sec. 20 GWB). In addition, according to the BKartA, PayPal’s conduct might also violate the prohibition of anti-competitive agreements (Article 101 TFEU, Sec. 1 GWB).
Dr. Jan-Oliver Schrotz, LL.M.
Stefan Bauer, LL.M.