CELEX: 32020M9776
Language: en
Date: 2020-09-30 00:00:00
Title: Commission Decision of 30/09/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9776 - WORLDLINE / INGENICO) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 30.9.2020
                                                               C(2020) 6828 final
                                                                                 PUBLIC VERSION
                                                                In the published version of this decision,
                                                                some information has been omitted
                                                                pursuant to Article 17(2) of Council
                                                                Regulation (EC) No 139/2004 concerning
                                                                non-disclosure of business secrets and other
                                                                confidential information. The omissions are
                                                                shown thus […]. Where possible the
                                                                information omitted has been replaced by
                                                                ranges of figures or a general description.
                                                               Worldline S.A.
                                                               80 Quai Voltaire
                                                               Bezons 95871
                                                               France
Subject:           Case M.9776 – Worldline/Ingenico
                   Commission decision pursuant to Article 6(1)(b) in conjunction with
                   Article 6(2) of Council Regulation No 139/20041 and Article 57 of the
                   Agreement on the European Economic Area2
Dear Sir or Madam,
(1)      On 12 August 2020, the European Commission received notification of a proposed
         concentration pursuant to Article 4 of the Merger Regulation by which Worldline
         S.A. (“Worldline”, France) intends to acquire within the meaning of Article 3(1)(b)
         of the Merger Regulation control of Ingenico Group S.A. (“Ingenico”, France) (the
         “Transaction”)3. Worldline is referred to as the “Notifying Party” and, together
         with Ingenico, will be referred to as the “Parties”.
1   Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between
    undertakings (the EC Merger Regulation), OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect
    from 1 December 2009, the Treaty on the Functioning of the European Union (the 'TFEU') has introduced
    certain changes, such as the replacement of 'Community' by 'Union' and 'common market' by 'internal
    market'. The terminology of the TFEU will be used throughout this decision.
2   OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3   Publication in the Official Journal of the European Union No C 273, 18.8.2020, p. 7.
                                                        2
 ---pagebreak--- 1.      THE PARTIES
(2)     Worldline is a company listed on Euronext Paris and active in the payment and
        transactional services industry. Worldline’s offerings include pan-European and
        domestic merchant acquiring for physical (in-store) or online (e-commerce)
        businesses, payment processing activities (acquiring and issuing), e-commerce
        acceptance solutions, and business solutions services to financial institutions,
        merchants, corporations and government agencies. Worldline also supplies point-of-
        sale (“POS”) terminals. Present in 32 countries, throughout Europe and in several
        emerging markets in Latin America and Asia, Worldline employs approximately
        12 000 people worldwide.
(3)     Ingenico is a company listed on Euronext Paris active in the payment services
        industry. It is primarily engaged in the design, development and supply of POS
        terminals (hardware and related software). Ingenico, however, also provides POS
        terminals along with merchant acquiring services and is also active in payment
        related services worldwide such as merchant acquiring services and e-commerce
        acceptance services. Ingenico employs around 8 000 people in 170 countries.
2.      THE OPERATION
(4)     The proposed concentration will be executed through a tender offer for Ingenico
        shares, which was filed with the French Autorité des marchés financiers on 8 July
        2020. The closing of the tender offer will be subject to the condition that Worldline
        acquires a number of Ingenico shares representing at least 60% of Ingenico’s share
        capital, on a fully diluted basis.4 Following completion of the Transaction, Worldline
        will thus acquire sole control of Ingenico. The Transaction therefore constitutes a
        concentration within the meaning of Article 3(1)(b) of the EU Merger Regulation.
3.      UNION DIMENSION
(5)     The undertakings concerned have a combined aggregate worldwide turnover of more
        than EUR 5 000 million (Worldline: EUR 2 382 million; Ingenico: EUR 3 370
        million)5. Each of them has a Union-wide turnover in excess of EUR 250 million
        (Worldline: EUR [...]; Ingenico: EUR [...]). In addition, they do not achieve more
        than two-thirds of their respective aggregate Union-wide turnover within one and the
        same Member State. The proposed concentration therefore has Union dimension.
4   See Section 2.3 of the Business Combination Agreement (“BCA”).
5   Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission
    Consolidated Jurisdictional Notice (OJ C 95, 16.4.2008, p. 1).
                                                       3
 ---pagebreak--- 4.      COMPETITIVE ASSESSMENT
4.1.    Introduction and the Parties’ activities
(6)     The Transaction combines Ingenico with Worldline, both payment service providers
        active across the European Economic Area (the ‘EEA’6) and worldwide. The
        Transaction follows multiple previous acquisitions by Worldline, including, amongst
        others, the acquisition of SIX Payment Services in 2018 and the acquisition of
        Equens S.E., including its subsidiary PaySquare SE in 2016.7
(7)     Card payment systems available to the public allow a cardholder to use a payment
        card, such as a debit or a credit card, to pay for products and services purchased at
        stores (physical or online) without using cash. Through these systems, the merchants
        are connected with financial institutions, namely the bank issuing the card (issuer
        bank) and the bank endorsing the cashless payment to the benefit of the merchant
        (acquirer bank), to execute the entire transaction from the moment of payment at the
        point of sale (“POS”) until the merchant’s account is credited.
4.1.1. Physical (POS) payment transactions
(8)     This Section will describe the actors and main steps in a physical card payment
        transaction. A physical card payment transaction begins when the cardholder uses a
        payment card to pay for the purchase of goods or services from a merchant. The
        merchant will seek authorisation for the transaction from its merchant acquirer. The
        authorisation request is transmitted from the merchant’s POS terminal (card reader)
        in which the customer entered his/her card. Subsequently, the authorisation request is
        sent to the acquirer processor, which will identify the scheme network to which the
        payment card belongs and transmits the request to the issuer processor. The issuer
        processor will perform checks, such as whether the card is valid and whether the
        cardholder’s account contains sufficient funds. The result of the authorisation request
        is sent back to the POS terminal; if the transaction is authorised, the merchant can be
        sure of payment.
6   The EEA covers the 27 Member States of the European Union (Austria, Belgium, Bulgaria, Croatia,
    Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
    Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Spain Slovakia and
    Sweden), as well as Iceland, Liechtenstein and Norway. The United Kingdom withdrew from the European
    Union as of 1 February 2020. During the transition period until the end of 2020, Union law will in
    principle continue to apply also to and in the United Kingdom and any reference to Member States in
    Union law shall be understood as including the United Kingdom. Therefore, any reference in this decision
    to EEA countries or the EEA territory shall be understood as also pertaining to the United Kingdom.
7   See case COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.4.2016.
                                                       4
 ---pagebreak---      Figure 1: Overview of an in-store card based payment transaction
     Source: Notifying Party
(9)  The setup described above can be subject to some variations between countries. A
     variety of players are active in the card payment process, such as banks, payment
     service providers (“PSPs”), and scheme networks. Typically, an actor is involved in
     multiple stages of the process.
(10) The Parties are both active in the following activities relating to in-store card based
     payment transactions:
     (a)    POS merchant acquiring: a set of services that enable merchants to accept
            payment cards at POS terminals. Merchant acquirers sign contracts with
            merchants (who are thus the customers of merchant acquirers), maintain the
            merchant-customer relationship and ensure that merchants receive the funds
            following the card payment transactions. Both Parties are active in POS
            merchant acquiring.
     (b)    Acquiring processing services: the merchant-oriented side of technically
            processing a transaction. This includes the network routing of payments
            towards the issuer processor and POS authorisation. Merchant acquirers can
            either provide acquiring processing in-house, or outsource it to third party
            processors. Ingenico only provides acquiring processing services internally,
            and does not offer them to external parties. Worldline provides acquiring
            process both to meet its internal needs, as well as to external parties.
     (c)    POS terminals: POS terminals are the card readers to which the payment
            card is introduced, and in some cases the PIN is entered, when making a
            payment transaction. The Parties are both active in (i) the manufacturing and
            supply of POS terminals, as well as (ii) the provision of POS terminals (card
            readers) to merchants, either on a rental or purchase basis, as well as related
            services such as maintenance. Various types of POS terminals are available,
            such as countertops, wireless portable terminals, unattended terminals, mobile
            POS terminals (“mPOS”) which rely on a device such as a mobile phone for
            network connection.
                                             5
 ---pagebreak--- (11)   In addition, the Parties perform the following activities relating to in-store card-based
       payment transactions that are specific to certain types of merchants or certain
       countries:
       (a)     In-store acceptance: a technical service that allows merchant to optimise the
               connection to multiple acquirers. In-store acceptance services act as a central
               platform that connects the merchant’s entire installed base of POS terminals
               to merchant acquirers. This service is only provided to large merchants with a
               significant amount of terminals and transaction volume. Within the EEA,
               Worldline and Ingenico both offer this service only in France.
       (b)     Network service provider (“NSP”) services: NSPs are part of the prevalent
               domestic Girocard scheme in Germany, through which a majority of card
               payment transactions in Germany are made. This country-specific four-party
               scheme involves a merchant, a cardholder, an NSP and a bank. NSPs provide
               payment card acceptance to a merchant, including terminal distribution,
               terminal management, and routing of card transactions towards the issuer
               banks.
4.1.2. E-commerce payment transactions
(12)   This Section will describe the actors and main steps in e-commerce payment
       transactions. Essentially, as set out in Figure 2, e-commerce payment transactions
       involve similar actors as physical payment transaction. As for physical payments, the
       Parties are active in merchant acquiring for e-commerce transactions, as well as
       acquiring processing services. E-commerce transactions do not involve POS
       terminals. Instead, when making a payment the customer will see a landing page or
       gateway, which then routs the customer to the appropriate interface for the selected
       payment method.
       Figure 2: Overview of an online (e-commerce) card-based payment transaction
       Source: Notifying Party
(13)   The Parties perform the following activities specific to e-commerce card payment
       transactions:
                                                6
 ---pagebreak---          (a)      E-commerce merchant acquiring: Similar to POS merchant acquiring, e-
                  commerce merchant acquiring comprises a set of services that allow
                  merchants to accept cards;
         (b)      E-commerce acceptance: The provision of this gateway service is called e-
                  commerce acceptance. E-commerce acceptance solutions can give the option
                  to select multiple types of cards (e.g. credit or debit card, various scheme
                  networks such as Mastercard and Visa) and can also rout payments with
                  alternative payment methods (“APMs”), such as digital wallets. E-commerce
                  acceptance can be offered to merchants on a stand-alone basis, or in a solution
                  together with e-commerce merchant acquiring. E-commerce acceptance can
                  also be offered to other merchant acquirers on a white label basis who then
                  sell it to merchants together with their e-commerce merchant acquiring
                  services. Both Parties are active in e-commerce acceptance services.
(14)     Finally, Worldline is also active in other services related to payment card systems,
         such as IT services, the provision of application software for the banking and
         financial sector and the provision of Single Euro Payments Area (“SEPA”) direct
         debit clearing services. Ingenico also has a number of ancillary activities in the EEA,
         such as management of loyalty programs, provision of prepaid cards (e.g. for mobile
         phones and online purchases) and provision of healthcare terminals in Germany.
         None of these activities are affected by the Transaction.
4.2.     Market definitions
4.2.1. Merchant acquiring
4.2.1.1. Product market definition
The Commission’s precedents
(15)     The Commission has previously defined a separate product market for merchant
         acquiring services.8 In recent cases,9 the Commission has considered separate product
         markets for the provision of merchant acquiring services and the provision of POS
         terminals and related services.10
(16)     In previous decisions,11 the Commission considered that the merchant acquiring
         market could be further subdivided on the basis of the following criteria: (i) types of
8   See for example Cases COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.04.2016, paragraph
    17 et seq; COMP/M.7241 - Advent International/Bain Capital Investors/Nets Holding, decision of
    08.07.2014, paragraph 12 et seq; COMP/M.7711 - Advent International/Bain Capital/ICBPI, decision of
    17.09.2015, paragraph 14 et seq; COMP/M.6956 - Telefonica/Caixabank/Banco Santander, decision of
    14.08.2013, paragraph 44 et seq; and COMP/M.5241 - American Express/Fortis/Alpha Card, decision of
    3.10.2008. paragraph 23 et seq.
9   See Cases COMP/M.9357 - FIS/WorldPay, decision of 5.7.2019, paragraphs 36-38; and COMP/M.9387 -
    Allied Irish Banks/First Data Corporation/Semeral, decision of 23.10.2019, paragraphs 11-15.
10 This distinction will be discussed in more detail in the section for POS terminals (Section 4.2.2)
11 See, for example, Cases COMP/M.9759 - Nexi/Intesa Sanpaolo (Merchant Acquiring Business), decision
    of 26.6.2020, paragraph 35 et seq; COMP/M.7873 - Worldline/Equens/Paysquare, decision of 20.4.2016,
    paragraph 19 et seq; COMP/M.7241 - Advent International/Bain Capital Investors/Nets Holding, decision
    of 8.7.2014, paragraph 12 et seq; COMP/M.7711 - Advent International/Bain Capital/ICBPI, decision of
    17.9.2015, paragraph 23 et seq; COMP/M.6956 - Telefonica/Caixabank/Banco Santander, 14.8.2013,
                                                         7
 ---pagebreak---        payment card schemes (international/domestic), (ii) payment card brands (e.g. Visa,
       Mastercard), (iii) type of payment card (debit/credit), (iv) based on whether the
       service relates to a physical payment via a POS terminal (“POS merchant acquiring”)
       or a web-based payment (“e-commerce merchant acquiring”) and (v) wholesale
       merchant acquiring (to banks) and retail merchant acquiring (to merchants). The
       Commission found that separate product markets for wholesale and retail merchant
       acquiring are appropriate for Italy.12 For all other countries and potential
       subdivisions, the Commission left the precise scope of the product market definition
       open.
The Notifying Party’s view
(17)   The Notifying Party submits that there is a market for merchant acquiring that
       encompasses all subdivisions,13 except for e-commerce merchant acquiring services,
       which should be assessed separately from POS merchant acquiring.14 The Notifying
       Party further submits that merchant acquiring services are differentiated between
       international and domestic schemes, in countries that have a domestic scheme.15
(18)   With respect to a subdivision by international (such as Visa and Mastercard)
       versus domestic cards (national schemes, such as Belgian Bancontact, German
       Girocard and French Carte Bancaire) the Notifying Party submits that while
       several arguments may support this historical segmentation, it is becoming less
       relevant in the context of the SEPA. To illustrate this, the Notifying Party submits
       that:
       (a)      First, since the introduction of the revised Directive (EU) 2015/2366 of 25
                November 2015 on payment services in the internal market16, non-domestic
                merchant acquirers can now acquire domestic scheme transactions. To
                illustrate this, it mentions examples such as the entry of EVO Payments
                (USA) and Worldline itself (via the acquisition of PaySquare) into Germany
                and the increase in Belgian domestic scheme licences from 6 in 2015 to 17 in
                2018.17
       (b)      Second, differences in card technology mentioned in previous cases18 are now
                no longer relevant, as all schemes have since moved to adopting the Europay
                Mastercard Visa (“EMV”) standard.19
   paragraph 46; and COMP/M.5241 - American Express/Fortis/Alpha Card, decision of 3.10.2008,
   paragraph 28 et seq.
12 See Case COMP/M.9759 - Nexi/Intesa Sanpaolo (Merchant Acquiring Business), decision of 26.6.2020,
   paragraph 27.
13 Form CO, paragraph 143.
14 Form CO, paragraph 172.
15 Form CO, summary box on page 67.
16 Directive 2015/2366/EU of the European Parliament and of the Council of 25 November 2015 on payment
   services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and
   Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC, OJ L 337, 23.12.2015, p. 35–127.
17 Form CO, paragraphs 146-147.
18 Case COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.4.2016.
19 Form CO, paragraph 148 and 149.
                                                   8
 ---pagebreak---        (c)      Third, price differences in merchant acquiring for international and domestic
                cards have decreased as a result of Regulation (EU) 2015/751 of 29 April
                2015 on interchange fees for card-based payment transactions20, which limits
                interchange fees, which in turn represent a significant part of the total fees.21
       (d)      Fourth, the product features of merchant acquiring services are the same for
                both domestic and international schemes.22
       (e)      Fifth, domestic schemes have been phased out in a number of EEA countries,
                including Luxembourg, Ireland, the Netherlands and Finland, as well as in the
                United Kingdom. Even in countries where a domestic scheme is available,
                banks may choose to issue cards with only an international card scheme with
                the aim of achieving cross-border acceptance.23
(19)   The Notifying Party finally submits that the segmentation between international and
       domestic schemes is only relevant in EEA countries that have a domestic scheme
       network, i.e. Belgium, Bulgaria, Denmark, France, Germany, Italy, Malta, Portugal,
       Slovenia and Spain.24
(20)   With regard to the segmentation between POS and e-commerce merchant acquiring
       services, the Notifying Party submits that these should be assessed as two separate
       product markets.25 The Notifying Party further submits that the product market for e-
       commerce merchant acquiring encompasses both card-based payment transactions,
       and APMs, such as bank transfers and e-wallets, as they closely compete with card
       payments.26
(21)   The Notifying Party indicates that there are differences in technical infrastructure,
       commercial strategy (e-commerce being more cross-border) and risk and fraud
       management. The Notifying Party also submits that e-commerce merchant acquiring
       requires different related services, such as facilitation of reimbursement in case of
       returns, management of automated subscriptions and uncoupling of authorisation and
       transaction.27 Finally, the Notifying Party submits that the segmentation between
       POS and e-commerce merchant acquiring is losing its relevance, as merchants
       increasingly require both services, and merchant acquirers that were initially only
       active in the e-commerce market have entered the POS space (e.g. Adyen and
       Wirecard).28
(22)   For a subdivision based on card brands (e.g. Mastercard, Visa), the Notifying Party
       submits that this is not relevant from both a supply and demand side perspective. As
       regards the supply side, it submits that most merchant acquirers are able to acquire
       several types of cards, and at least the most common brands, to be able to meet
20 Regulation (EU) 2015/751 of 29 April 2015 on interchange fees for card-based payment transactions. OJ L
   123, 19.5.2015, p1.
21 Form CO, paragraph 150.
22 Form CO, paragraph 151.
23 Form CO, paragraphs 152-154.
24 Form CO, paragraph 153.
25 Form CO, paragraph 172.
26 Form CO, paragraph 171.
27 Form CO, paragraph 170.
28 Form CO, paragraph 168.
                                                    9
 ---pagebreak---       customer demands. Concerning the demand side, the Notifying Party indicates that
      merchants aim to accept all brands, or at least all well established brands. The
      Notifying Party further submits that any relevant difference between card brands
      would already be captured by other segmentations, such as international versus
      national cards and debit versus credit cards.29
(23)  Regarding a subdivision between credit cards and debit cards, the Notifying Party
      considers that this is not relevant for the following reasons:
      (a)     First, while services may be different to some extent (e.g. charge back for
              credit cards), all merchant acquirer offer merchant acquiring services for both
              debit and credit cards.30
      (b)     Second, due to the introduction of Regulation 2015/751, the price gap
              between merchant acquiring services for debit and credit cards has
              significantly reduced. As a result, credit cards have become more interesting
              even for smaller, local merchants.31
      (c)     Third, in the vast majority of cases, merchant require merchant acquiring
              services for both debit and credit cards. The Notifying Party illustrates this by
              submitting that [The vast majority]% of Ingenico’s customers rely on both
              debit and credit card merchant acquiring, and for Worldline debit-only points
              of sale represent only [<10%], [<10%] and [<10%] in Austria, Germany and
              Luxembourg respectively.32
      (d)     Fourth, as the travel and tourism industries have been growing rapidly during
              the last decades, merchants are increasingly interested in being able to serve
              tourists, which often use credit cards of, for example, Visa and Mastercard.33
      (e)     Fifth, any difference that may exist between debit and credit cards would
              already be covered by the segmentation between international and domestic
              schemes (discussed above), as domestic schemes are only debit based.34
(24)  The Notifying Party contests the relevance of a segmentation between a wholesale
      (from PSPs to banks) and retail market (to merchants) for merchant acquiring.
      The Notifying Party indicates that while it – as some other PSPs – is involved in
      alliances with banks, these partnerships should not be viewed as a wholesale/retail
      relationship.35 Instead, banks should merely be seen as distributors of merchant
      acquiring services, as:
      (a)     Merchant acquirers (PSPs) enter into contracts directly with merchants
              (although three-party contracts between the merchant, merchant acquirer and
              bank may exist) and merchant acquirers hold the acquiring license and remain
              liable to the scheme network;
29 Form CO, paragraphs 155-157.
30 Form CO, paragraph 159.
31 Form CO, paragraphs 160 and 161.
32 Form CO, paragraphs 163 and 164.
33 Form CO, paragraph 165.
34 Form CO, paragraph 166.
35 Form CO, paragraphs 174-176.
                                                10
 ---pagebreak---       (b)     Banks act mostly as a distribution channel for merchant acquirers, and are not
              the exclusive mode of distribution as merchant acquirers have own sales
              forces and other sales partners as well;
      (c)     While merchant acquiring services offered in partnerships with banks may be
              branded with the bank name, this should just be seen as branding, and not as a
              white label service provided to the bank.36
(25)  Notwithstanding the Notifying Party’s view that wholesale merchant acquiring and
      retail merchant acquiring are not separate product markets, it indicated that the
      relationships between merchant acquirers and partner banks can have the following
      characteristics:
      (a)     Banks have direct sales contact with the merchants and particularly for larger
              accounts, the key account manager is typically employed by the bank;
      (b)     Banks may have a degree of pricing freedom (with a floor agreed with the
              merchant acquirer);
      (c)     Banks may bundle merchant acquiring services with other financial services
              in their portfolio.37
(26)  Finally, and for the sake of completeness, the Notifying Party discusses a possible
      subdivision between large merchants and smaller merchants (“SMEs”). The
      Notifying Party submits that such a segmentation is not relevant, as merchant
      acquirers in practice serve all types of customers and the size of clients for a given
      merchant acquirer is a result of historical entry, commercial strategy and distribution
      channels. The Notifying Party further indicates that there is no market sizing
      available by customer size, there is no harmonised definition of each customer
      segment, and all merchant acquirers are able to serve all types of customers.38
The Commission’s assessment
(27)  In line with Commission precedent, the Commission considers that merchant
      acquiring constitutes a separate product market.
(28)  The Commission’s market investigation was inconclusive as to whether the sub-
      segmentations considered in previous Commission decisions, namely (i) types of
      payment card schemes (international/domestic), (ii) payment card brands (e.g. Visa,
      Mastercard), and (iii) type of payment card (debit/credit) are appropriate. Regarding
      the segmentation between POS merchant acquiring and e-commerce merchant
      acquiring, the market investigation provided sufficient evidence to conclude that
      these constitute separate product markets. By contrast, the Commission considers that
      the market investigation did not provide sufficient evidence to distinguish between (i)
      SMEs and large merchants and (ii) wholesale merchant acquiring and retail merchant
      acquiring.
36 Form CO, paragraph 177.
37 Form CO, paragraph 178.
38 Form CO, paragraph 185.
                                               11
 ---pagebreak--- (29)   Concerning the segmentation between domestic and international cards schemes,
       around half the merchants responding the market investigation considered that terms
       and conditions differ. Those that took the view that terms and conditions differ, most
       often mention that fees are different.39 Similarly, around half the PSPs that responded
       to the market investigation consider that terms and conditions differ. PSPs also
       mention pricing as the main difference most often, however, some PSPs indicated
       that terms and conditions are broadly the same.40
(30)   On the segmentation between different card brands, a slight majority of merchant
       considered that terms and conditions are different. However, these differences may
       largely be explained by whether the card brand is part of a domestic or international
       card scheme: when asked whether they thought that terms and conditions differ for
       different brands within domestic or international schemes, only a minority of
       merchants indicated that they thought this to be the case.41 The majority of PSPs
       considered terms for different card brands to be broadly the same.42
(31)   About the segmentation between credit and debit cards, a slight majority of
       merchants considered terms and conditions to be different. Most indicate that credit
       card fees are typically higher than debit card fees. 43 For PSPs, a slight minority
       considered terms and conditions to be different.44 Those that consider terms are
       different, mention differences in pricing, as well as potential risk (which is higher for
       credit cards) and additional services offered for credit cards (e.g. chargeback
       handling).
(32)   Concerning a distinction by SMEs and large merchants, the Commission recently
       took the view that such a segmentation is not appropriate,45 in line with the Notifying
       Party’s submissions. The market investigation in the present case gave no reason to
       depart from this view. Therefore, the Commission considers that large merchants and
       SMEs do not constitute separate product markets, but may constitute different
       segments in a heterogenic market.
(33)   Regarding the distinction between wholesale merchant acquiring (provided by
       PSPs to banks) and retail merchant acquiring (provided to merchants), PSPs
       responding to the market investigation provided mixed feedback. While the majority
       of PSPs agreed that wholesale and retail models exist in the EEA, feedback was more
       mixed when asked whether separate wholesale markets exist in the specific national
       markets affected by the Transaction (i.e. Austria, Belgium, Germany, and
       Luxembourg).
(34)   For the purposes of this Transaction, given the Member States in which the
       Transaction gives rise to affected geographic markets, the Commission concludes
       that a distinction between wholesale and retail merchant acquiring is not appropriate.
       Both Parties only have very limited activities that could be considered as wholesale
39 Responses to question 9 of Questionnaire Q1 to Merchants.
40 Responses to question 10 of Questionnaire Q2 to PSPs.
41 Responses to question 9 of Questionnaire Q1 to Merchants.
42 Responses to question 10 of Questionnaire Q2 to PSPs.
43 Responses to question 9 of Questionnaire Q1 to Merchants.
44 Responses to question 10 of Questionnaire Q2 to PSPs.
45 See Case COMP/M.9759 - Nexi/Intesa Sanpaolo (Merchant Acquiring Business), decision of 26.6.2020,
   paragraph 44.
                                                    12
 ---pagebreak---        merchant acquiring activities. In the national merchant acquiring markets affected by
       the Transaction (i.e. Austria, Belgium, Germany and Luxembourg), Worldline has
       partnerships with a very limited number of banks in Belgium (representing [...] of
       Worldline’s market share in Belgium) and with only [...] in Germany (representing
       [...] of Worldline’s market share in Germany).46 Ingenico is not involved in typical
       wholesale / retail relationships. Only Ingenico’s subsidiary Payone, a joint venture
       with Deutscher Sparkassenverlag (“DSV”) sells merchant acquiring services under
       the DSV brand in Germany (representing [...] of Ingenico’s market share in
       Germany). However, as DSV is a parent of Payone, this does not resemble a typical
       wholesale / retail relationship but rather an intra-group relation, so no overlap on a
       potential wholesale market exists.47 Additionally, wholesale / retail relationships
       between PSPs and banks appear to be of limited importance in the national merchant
       acquiring markets affected by the Transaction. In Belgium, Worldline is the only
       Party to engage in these, and in Germany there are few merchant acquirers that have
       a relationship with only one bank each as well.48 These relationships never comprise
       more than 10% of the total market. For the purposes of the Transaction, market
       shares for merchant acquirers will include the volumes that are distributed via banks,
       so that their full market presence is considered.
(35)   Finally, concerning the distinction between POS merchant acquiring and e-commerce
       merchant acquiring, a majority of both merchants and PSPs that responded to the
       market investigation considered that POS merchant acquiring is materially different
       from e-commerce merchant acquiring.49 Many mentioned that the providers for e-
       commerce merchant acquiring are different and that a broader set of suppliers is
       available for e-commerce only set-ups. Additional fees and security requirements
       related to e-commerce transactions were also mentioned by many respondents. One
       PSP explains that “e-commerce often shows higher fraud risks. - Products or services
       are often delivered multiple days after the payment. This opens up a chargeback risk
       for the acquirer in case of bankruptcy for the merchant. Therefore, pricings are
       clearly different, the KYC-process is stricter and some additional conditions apply,
       allowing the acquirer to cover for chargeback risk for example.” A significant
       proportion of merchants indicate that they source e-commerce merchant acquiring
       services separately from POS merchant acquiring services.50
(36)   In conclusion, the Commission considers that, based on the feedback from the market
       investigation, POS merchant acquiring and e-commerce merchant acquiring
       constitute separate product markets. Whether separate product markets exist for the
       segmentations between (i) credit and debit cards, (ii) card brands, and (iii) domestic
       and international payment card schemes, as well as whether e-commerce merchant
46 This excludes lead agreements, where banks are remunerated once for referral to the merchant acquirer,
   which is not considered a wholesale / retail setup.
47 Form CO, paragraph 175 and Annex U to the Form CO, paragraphs 303-304.
48 For comparison, in some national markets that are not affected by the Transaction, such as Italy, PSPs may
   have commercial relationships with tens of banks.
49 Responses to question 10 of Questionnaire Q1 to Merchants; responses to question 11 of Questionnaire Q2
   to PSPs.
50 Responses to question 11 of Questionnaire Q1 to Merchants.
                                                       13
 ---pagebreak---          acquiring can be further sub-divided between APMs and card-based payments, can
         be left open, as it does not materially affect the Commission’s assessment.51
4.2.1.2. Geographical market definition
The Commission’s precedents
(37)     In past decisions, the Commission has considered the market for merchant acquiring
         to be likely national in scope, except for e-commerce merchant acquiring services,
         which it considered to be at least EEA-wide.52 The precise scope of the geographic
         market definition was ultimately left open, except for Belgium and Germany, for
         which the geographic market definition of merchant acquiring was defined as
         national.53
The Notifying Party’s view
(38)     The Notifying Party submits that the relevant geographic scope for the market for
         POS merchant acquiring is national,54 as a local presence (e.g. a sales force) is still
         important. However, the Notifying Party does indicate that the development of omni-
         channel solutions (combining POS and e-commerce merchant acquiring) means that
         the POS merchant acquiring market is increasingly becoming EEA-wide. The
         Notifying Party proposes the following definitions for each of the sub-segments of
         the POS merchant acquiring market (which in the Notifying Party’s view all belong
         to the overall market for POS merchant acquiring):55
         (a)      Domestic scheme: National in scope because of country-based specificities;
         (b)      International scheme: An EEA-wide market may be relevant as the schemes
                  have been developed through rules and service designed to enable cross-
                  border operation. This is further supported by SEPA, which has further
                  harmonised the European card payments area;
         (c)      Debit cards: Larger than national in scope; the relevant geographical scope
                  could be EEA-wide, except for the fact that cards issued under domestic
                  scheme networks are always debit cards;
         (d)      Credit cards: National in scope, if not EEA-wide, as credit cards are issued
                  under international scheme networks;
51  E-commerce merchant acquiring is not affected on EEA-wide level regardless of whether APMs are
    included in the product market, and will therefore not be covered further in this decision.
52  See Cases COMP/M.9387 - Allied Irish Banks/First Data Corporation/Semeral, decision of 23.10.2019,
    paragraph 16 et seq; COMP/M.9357 - FIS/WorldPay, decision of 5.07.2019, paragraph 23 et seq; and
    COMP/M.7873 - Worldline/Equens/Paysquare, decision of 20.04.2016, paragraph 108. This follows from
    the Commission’s previous decisions in e.g., COMP/M.6956 - Telefonica/Caixabank/Banco Santander,
    decision of 14.08.2013, paragraph 50; and COMP/M.5241 - American Express/Fortis/Alpha Card,
    decision of 3.10.2008, paragraph 30. See also COMP/M.7241 - Advent International/Bain Capital
    Investors/Nets Holding, decision of 8.07.2014, paragraph 30.
53  See Case COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.04.2016, paragraph 108 .
54  Form CO, summary box on page 67.
55  Form CO, paragraph 194.
                                                        14
 ---pagebreak--- (39)   The Notifying Party submits that the market for e-commerce merchant acquiring
       services is EEA-wide in scope, as no local presence is required and suppliers provide
       services across all EEA Contracting Parties.56
The Commission’s assessment
(40)   The Commission has observed a trend towards an EEA-wide market for merchant
       acquiring in past decisions, but considered that the structure of the market still
       pointed towards national merchant acquiring markets.57
(41)   In this case, the market investigation gave indications that support this trend towards
       an EEA-wide market. A significant number of merchants would consider sourcing
       from an international merchant acquirer, particularly in case of a small but significant
       and non-transitory increase in price (“SSNIP”).58 Especially merchants with activities
       in multiple countries indicate that they aim at having a single merchant acquirer that
       can support them in multiple countries, with one stating: “it is interesting from
       volume perspective to have an acquirer present in different European countries for
       our business”.
(42)   However, when asked specifically about POS merchant acquiring services, a majority
       of merchants indicate that they only consider local merchant acquirers as suitable
       suppliers. Respondents indicate that it is important to have a merchant acquirer with
       local presence, to provide support in the local language and to provide on-site
       technical support. Domestic card schemes are also mentioned as a barrier, as
       international acquirers typically are not able to handle payments via local payment
       card schemes.59
(43)   PSPs gave mixed feedback on whether local presence is required to offer POS
       merchant acquiring services. However, replies to the market investigation strongly
       indicate that local presence is required to (i) provide on-site technical support, (ii)
       meet Know Your Customer (“KYC”) requirements, (iii) adapt to local regulations,
       technical rules and customs, and (iv) provide support in the local language. In
       countries with a domestic payment card scheme, local presence is considered
       particularly important, with one PSP indicating that “…it is highly recommended,
       even essential, to have [local] activities/physical presence. This enables a better
       control and knowledge of the local protocols and infrastructures used for acquisition
       of payments, and simplifies processes (for instance in case of interbank incidents or
       disputes)”.60
(44)   The market structure supports national markets for POS merchant acquiring services.
       While some players, including the Parties, are active in several EEA Contracting
       Parties, no player is truly active on an EEA-wide level. Additionally, the set of
       competitors found in each country is different. In some countries, such as France,
56 Form CO, paragraph 194.
57 See, for example, Case COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.04.2016, paragraph
   99; and COMP/M.9759 - Nexi/Intesa Sanpaolo (Merchant Acquiring Business), decision of 26.06.2020,
   paragraphs 49-50.
58 Responses to questions 13 and 18 of Questionnaire Q1 to Merchants.
59 Responses to questions 14 and 17 of Questionnaire Q1 to Merchants.
60 Responses to question 15 of Questionnaire Q2 to PSPs.
                                                     15
 ---pagebreak---          merchant acquiring services are primarily provided by banks, while in other
         countries, such as Belgium, PSPs are more prevalent.
(45)     The market structure and market investigation do not give any indication that a
         national market definition would not be equally relevant for the possible
         segmentations of POS merchant acquiring, namely according to credit/debit cards,
         card brand and by international / domestic card network schemes.
(46)     Regarding e-commerce merchant acquiring, the majority of both merchants and PSPs
         gave indications that the market is at least EEA-wide. The majority of merchants that
         expressed a view indicated that they would consider international merchant acquirers
         for e-commerce.61 Similarly, the large majority of PSPs indicated that they consider
         competition to take place on EEA or global level.62
(47)     The market structure for e-commerce merchant acquiring supports an EEA-wide or
         global market, as several competitors, such as Adyen and WorldPay, compete across
         the EEA as well as outside the EEA.
(48)     In light of the above, the Commission considers that (i) the market for the provision
         of POS merchant acquiring services (and its possible segmentations according to
         credit/debit cards, card brand and international/domestic card network schemes) is
         national in scope and (ii) the market for the provision of e-commerce merchant
         acquiring services (and its possible segmentation according to APMs and card-based
         payment methods) is at least EEA-wide in scope.63
4.2.2. POS terminals
4.2.2.1. Product market definition
The Commission’s precedents
(49)     In its most recent decisions, the Commission defined a market for the provision of
         POS terminals and related services separate from the market for merchant acquiring
         services.64
(50)     The Commission further considered whether the market for the provision of POS
         terminals should be further subdivided by type of POS terminal (traditional POS
         terminals versus mPOS and smartPOS terminals) or based on customer size (small
         versus medium-sized versus large customers). Ultimately, the Commission left both
         questions open.65
61  Responses to question 15 of Questionnaire Q1 to Merchants.
62  Responses to question 18 of Questionnaire Q2 to PSPs.
63 E-commerce merchant acquiring is not affected on EEA-wide level regardless of whether APMs are
    included in the product market, and will therefore not be covered further in this decision.
64 See Cases COMP/M.9357 - FIS/WorldPay, decision of 5.7.2019, paragraphs 36-38; and COMP/M.9387 –
    Allied Irish Banks/First Data Corporation/Semeral, decision of 23.10.2019, paragraphs 11-15.
65 See Cases COMP/M.9759 – Nexi/Intesa Sanpaolo (Merchant Acquiring Business), decision of 26.6.2020,
    paragraphs 65-67; COMP/M.9357 - FIS/WorldPay, decision of 5.07.2019, paragraphs 29-38; and
    COMP/M.9387 – Allied Irish Banks/First Data Corporation/Semeral, decision of 23.10.2019, paragraphs
    11-15.
                                                        16
 ---pagebreak--- (51)  The Commission has not yet considered a market for the manufacturing and supply
      of POS terminals separate from the provision and management of POS terminals in
      its past decisional practice.
The Notifying Party’s view
(52)  The Notifying Party submits that there are separate markets for (i) the manufacturing
      and supply of POS terminals, and (ii) the provision and management of POS
      terminals to merchants.66
(53)  As regards the manufacture and supply of POS terminals, the Notifying Party
      explains that, while the Commission has not previously assessed the market for
      manufacturing and supply of POS terminals, it has on some occasions indirectly
      noted the relevance of separating this activity from the provision and management of
      POS terminals. For example, in one case the Commission assessed POS terminals in
      the UK both in terms of new shipments and existing terminals (installed base), which
      more or less mirrors the proposed separate product markets.67 In another case, the
      Commission considered that the parties to the transaction were not close competitors,
      as one procured POS terminals externally and the other produced them in-house.68
(54)  Concerning the manufacturing and supply of POS terminals, the Notifying Party
      furthermore indicates that there are three types of customers for this activity: (i)
      merchant acquirers that do not manufacture POS terminals in-house; (ii) large
      merchants, which often procure POS terminals directly from the manufacturer
      instead of via the merchant acquirer; and (iii) distributors which resell the POS
      terminals and potentially develop software for their customers.69
(55)  As regards the provision and management of POS terminals, the Notifying Party
      submits that this activity is typically performed by merchant acquirers and consists of
      the selling or renting of terminals to merchants. It also includes services such the
      maintenance and repair of the terminals. The Notifying Party indicates that while the
      provision and management of POS terminals on the one hand is closely related to
      merchant acquiring on the other, they constitute a separate product markets. In
      support of this, the Notifying Party indicates that merchants can either purchase or
      rent their POS terminals from merchant acquirers, buy them from manufacturers
      directly, or buy them from distributors.70
(56)  The Notifying Party submits that a further sub-segmentation of the market for the
      manufacturing and supply of POS terminals and the market for provision and
      management of POS terminals is not appropriate.71
(57)  Concerning a subdivision between mPOS, smartPOS and traditional POS
      terminals for the manufacture and supply of POS terminals, the Notifying Party
      submits that:
66 Form CO, paragraph 252.
67 Form CO, paragraph 246. See also COMP/M.9357 - FIS/WorldPay, decision of 5.7.2019, Table 1.
68 Form CO, paragraph 249. See also Case COMP/M.9387 - Allied Irish Banks/First Data Corporation/
   Semeral, decision of 23.10.2019, paragraph 57.
69 Form CO, paragraph 228.
70 Form CO, paragraphs 243.
71 Form CO, paragraphs 253.
                                                  17
 ---pagebreak---        (a)     First, on the demand side, both devices serve the same purpose, i.e. allowing
               in-store payments and traditional POS terminals are a credible alternative for
               most if not all merchants that would consider mPOS terminals. Conversely,
               some retailers may prefer the more solid materials of a traditional POS, but
               ultimately mPOS would be a substitute.72 The Notifying Party does indicate
               that mPOS terminals are typically less expensive than traditional POS
               terminals.73
       (b)     Second, on the supply side, traditional POS manufacturers can easily supply
               mPOS devices, as they are made in the same manufacturing plants and there
               are no significant barriers to switching production between the two.74
(58)   Regarding a subdivision by POS terminal customer size, the Notifying Party
       submits that this segmentation is not relevant as any given player would be able to
       serve customers of all sizes. Any stronger positions with smaller or larger merchants
       in a given country is a result of historical market entry, commercial strategy and
       distribution channels. In any event, the Notifying Party indicates that it would not be
       able to assess a market segmented by customer size, as there is not market sizing
       available for each category of customer and there is no harmonised definition for the
       customer categories.75
The Commission’s assessment
(59)   The market investigation largely confirmed the Notifying Party’s arguments that
       there are two distinct markets for POS terminals, namely for (i) the manufacture and
       supply of POS terminals (mainly to distributors, merchant acquirers, and large
       merchants) and (ii) the provision and management of POS terminals to merchants.76
       A large majority of merchants indicated they would not increase their purchase of
       managed POS terminals if the price of POS terminal hardware shipped would
       increase, and conversely would not increase their purchase of “naked” POS terminals
       if the price of managed POS terminals would increase.77
(60)   The market investigation largely confirmed that the provision (and management) of
       POS terminals should be viewed as distinct from the provision of merchant acquiring
       services, as the two are not necessarily purchased together. However, in some
       countries these markets are closely related such as in Austria. Indeed, some
       respondents confirmed the Parties’ claim that it may depend on the country
       concerned, with Austria in particular being a country where the POS terminal is
       supplied alongside merchant acquiring services, suggesting these services are
       complementary, rather than being substitutes.78
(61)   The market investigation was not conclusive as to whether the market for the
       manufacture and supply of POS terminals should be further segmented between the
       different categories of POS (including traditional POS, mPOS, or SmartPOS).
72 Form CO, paragraphs 254 and 256.
73 Form CO, paragraph 257.
74 Form CO, paragraph 255.
75 Form CO, paragraphs 272-274.
76 See responses to question 42 of Questionnaire Q2 to PSPs.
77 See responses to questions 45.1 and 45.2 of Questionnaire Q1 to Merchants.
78 See responses to question 43.1 of Questionnaire Q1 to Merchants.
                                                      18
 ---pagebreak---        (a)      As regards the demand side, a large majority of merchants indicated they
                would not increase their purchase of another type of POS terminals if the
                price of a specific category would increase, including in particular merchants
                in industries such as transport or catering which may require the use of
                mPOS.79
       (b)      Regarding the supply side, a large majority of respondents, including both
                merchants and PSP consider that POS terminals are commoditised products
                and that most manufacturers are able to offer a similar product range. 80 In
                addition, most suppliers offer all categories of POS terminals. This is
                particularly the case of the main POS terminal manufacturers globally,
                including the Parties, as well as PAX, VeriFone, Datecs, First Data, Spire and
                Castles.81 However, only a minority of POS terminal manufacturers indicated
                that they could switch production between the different categories of POS
                terminals at short notice and for limited investments.82
(62)   In line with the Notifying Party’s views, the market investigation did not provide any
       element that would suggest that a segmentation by category of POS terminals would
       be appropriate with regard to the provision and management of POS terminals.
(63)   With regard to a segmentation based on customer size (e.g. SMEs and large
       customers), the market investigation indicates that such a segmentation is not
       appropriate. While the market investigation indicates that supply conditions may
       differ between large and small customers, this is largely linked to scale effects, rather
       than reflecting differing competitive dynamics.83 As large customers purchase more
       POS terminals, they benefit from better supply conditions including lower prices,
       while different customer categories do not constitute fully distinct market segments.
       A majority of merchants (including large retailers) indicated that their needs are
       fairly commoditised in the sense that they do not require specific products or services
       that only a number of POS terminal providers can offer.84
(64)   It follows from the above that for the purposes of this decision, it is necessary to
       distinguish product markets for (i) the manufacture and supply of POS terminals and
       (ii) the provision and management of POS terminals. In addition, for the purposes of
       this decision, a segmentation depending on customer size is not needed, and the
       question as to whether a segmentation depending on the type of POS supplied for the
       manufacture and supply of POS terminals, can be left open, as the competitive
       assessment would not change With regards to the provision and management of POS
       terminals, no further sub-segmentation is needed.
79 Responses to question 47 of Questionnaire Q1 to Merchants.
80 Responses to question 52 of Questionnaire Q1 to Merchants; responses to question 51 of Questionnaire Q2
   to PSPs.
81 Responses to question 50 of Questionnaire Q2 to PSPs.
82 Responses to question 50.3 of Questionnaire Q2 to PSPs.
83 Responses to questions 51 and 51.1 of Questionnaire Q1 to Merchants; Responses to questions 53 and 53.1
   of Questionnaire Q2 to PSPs.
84 Responses to question 66 of Questionnaire Q1 to Merchants.
                                                     19
 ---pagebreak--- 4.2.2.2. Geographical market definition
The Commission’s precedents
(65)    In its previous decisions, the Commission considered that the geographic market
        definition for the provision and management of POS terminals is likely national, or at
        least regional (e.g. Benelux, Nordics) in scope. In particular, the Commission noted
        that technical specifications such as standards and protocols may differ between
        countries. Furthermore, the Commission considered that the provision and
        management of POS terminals requires presence of local service teams. Ultimately,
        the Commission left the geographical market definition open.85
(66)    The Commission has not considered a market for the manufacturing and supply of
        POS terminals separate from the provision and management of POS terminals in its
        past decisional practice.
The Notifying Party’s view
(67)    The Notifying Party submits that the market for the manufacturing and supply of
        POS terminals is worldwide, and at the very least EEA wide, in scope.
(68)    On the supply side, the Notifying Party indicates that terminals are sold as hardware,
        which is not country-specific, and that international players can sell their terminals
        across countries. To support this, they indicate that Asian players such as PAX and
        Newland have been able to gain market share in the EEA rapidly.86 The Notifying
        Party further submits that whilst sometimes country-specific applications need to be
        developed, this is usually done once a client has been secured, and only requires that
        a supplier has the ability to develop such application, which all do.
(69)    On the demand side, the Notifying Party submits that the customers for the
        manufacturing and supply of POS terminals are large retailers, banks and merchant
        acquirers, which are all sophisticated buyers and often have demand across multiple
        countries. According to the Notifying Party, the rapid rise of Asian manufacturers in
        the EEA shows that customers have no preference for manufacturers from the EEA.87
(70)    The Notifying Party further supports its view that the market for manufacturing and
        supply of POS terminals is worldwide by presenting the global sales volumes of the
        Parties, which show that particularly Ingenico is active globally: sales outside of
        Europe make up [...]% of Ingenico’s and [<20]% of Worldline’s POS terminal
        sales.88
(71)    On the other hand, in line with its view on the market for POS merchant acquiring,
        the Notifying Party considers that the market for the provision and management of
85  See Cases COMP/M.9387 – Allied Irish Banks/First Data Corporation/Semeral, decision of 23.10.2019,
    paragraphs 16-18; COMP/M.9357 - FIS/WorldPay, decision of 5.07.2019, paragraphs 39-41; and
    COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.04.2016, paragraphs 128-134.
86 Form CO, paragraph 285.
87 Form CO, paragraph 286.
88 Form CO, paragraphs 287-290.
                                                 20
 ---pagebreak---        POS terminals is national in scope, or in some cases comprises clusters of countries
       (e.g. the Nordics, consisting of Denmark, Finland, Norway and Sweden).89
The Commission’s assessment
(72)   The market investigation largely confirmed the Parties’ submissions according to
       which the geographic scope for the markets are: (i) at least EEA-wide for the
       manufacturing and supply of POS terminals, and (ii) national for the provision and
       management of POS terminals.
(73)   The large majority of respondents confirmed that it is not necessary for a POS
       terminal manufacturer to have a physical presence in a country to ship POS
       terminals.90 In fact, the large majority of POS terminal manufacturers responding to
       the investigation who do not offer management services in some countries still ship
       POS terminals to these countries.91
(74)   Regarding the shipment of POS terminals hardware, the large majority of responding
       merchants who expressed a view consider that there are no barriers to procuring POS
       terminals across countries. Similarly, a majority of PSPs consider that there are no
       obstacles to shipping or purchasing POS terminals across the world and that there are
       no barriers for them to procure POS terminals across countries.92 The share of
       transport costs in the final prices of POS terminals is typically below 5%.93
       Moreover, even if POS terminals may need certain protocols specific to some
       countries, the Parties confirmed that neither Worldline nor Ingenico own proprietary
       protocols ensuring the connection/interoperability between POS terminals and
       merchant acquirers in the EEA, or any intellectual property rights over these protocol
       (including for instance the C-TAP, ZVT, EP2, CB2 and CB2A protocols) and that
       suppliers are able to include the required protocols.94 In this vein, a significant
       competitor explains that “with respect to the software integrated in the POS
       terminals, [the competitor] considers that there can be minor regional differences
       and software can sometimes be specific to one country. Differences include, for
       example, integrating with local scheme networks and language. However, the
       software can easily be adapted to the relevant country in question and local scheme
       networks and language can easily be integrated in the software. [The competitor]
       indicates that software can be provided by the POS manufacturer, by payment
       service providers (PSPs), independent software vendors (ISVs), acquiring processors
       or in some cases merchants”.95
(75)   On the other hand, a majority of merchants indicated that it is necessary for a POS
       terminal supplier to have a physical presence in a country to manage POS terminals,
       including to ensure swifter maintenance and support.96 In this vein, one manufacturer
89 Form CO, paragraph 291.
90 Responses to question 48 of Questionnaire Q1 to Merchants; responses to question 46 of Questionnaire Q2
   to PSPs.
91 Responses to question 52 of Questionnaire Q2 to PSPs.
92 Responses to question 51 of Questionnaire Q1 to Merchants; responses to questions 45 and 47 of
   Questionnaire Q2 to PSPs.
93 Responses to question 44 of Questionnaire Q2 to PSPs.
94 For more details, see Section 4.6.1.
95 Non-confidential minutes of a call with a competitor on 12 June 2020.
96 Responses to questions 49 and 49.1 of Questionnaire Q1 to Merchants.
                                                      21
 ---pagebreak---         of POS terminals confirmed for instance that it “offers [management] services only in
        case it has the required operations in the country”.97 Finally, the responses of PSPs
        are mixed on the issue.98
(76)    Considering that the market investigation has not yielded any clear indications that
        would militate in favour of deviating from the Commission´s previous decisional
        practice and the Notifying Party’s views, the Commission considers that for the
        purposes of this decision, the market for the provision and management of POS
        terminals should be considered as national in scope.
(77)    In line with the Notifying Party’s views and considering the results of the market
        investigation, the Commission considers that for the purposes of this decision (i) the
        market for the manufacture and supply of POS terminals and any plausible sub-
        segmentation according to type of terminal should be considered as at least EEA-
        wide in scope, and that (ii) the market for the provision and management of POS
        terminals should be considered as national in scope.
4.2.3. Acquiring processing
4.2.3.1. Product market definition
The Commission’s precedents
(78)    The Commission previously considered a distinct market for card processing and
        within that market, it has discussed the existence of separate relevant markets for
        acquiring processing services and issuing processing services. The exact market
        definition was, however, ultimately left open.99
(79)    Within acquiring processing, the Commission has identified a possible further sub-
        segmentation based on (i) the payment card scheme (domestic/international) and (ii)
        the platform, distinguishing between physical POS terminals and through web-
        enabled interfaces (e-commerce). The exact market definition was ultimately left
        open.100
The Notifying Party’s view
(80)    The Notifying Party submits that acquiring processing constitutes a separate product
        market, and that further subdivisions are not appropriate.101
(81)    Regarding a segmentation between domestic and international card scheme networks,
        the Notifying Party indicates that there is full supply side and demand side
        substitutability between acquiring processing services for these segments, as all
97  Non-confidential Minutes of a call with a competitor held on 17 June 2020, paragraph 15.
98  Responses to question 47 of Questionnaire Q2 to PSPs.
99 See Cases COMP/M.9452 - Global Payments/TSYS, decision of 16.9.2019, paragraphs 17-25;
    COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.4.2016, paragraphs 33-37; and M.7241 -
    Advent International/Bain Capital Investors/Nets Holding, decision of 8.7.2014, paragraph 31-36.
100 See Cases COMP/M.8073 - Advent International/Bain Capital/Setefi Services/Intesa Sanpaolo Card,
    decision of 10.8.2016, paragraphs 22-27; and COMP/M.7241 - Advent International/Bain Capital
    Investors/Nets Holding, decision of 8.7.2014, paragraph 36.
101 Form CO, paragraph 313.
                                                       22
 ---pagebreak---         acquirer processors can process both and customers generally choose one processor
        for both types of schemes.102
(82)    Similarly, concerning a segmentation between POS and web-enabled (e-commerce)
        acquiring processing, the Notifying Party indicates that acquiring processing for both
        types of transactions are fully substitutable as well. The Notifying Party indicates that
        web-enabled transactions are characterised by a higher level of security due to the
        higher risk of fraud, but that regardless, acquiring processors handle both transaction
        types indifferently. Additionally, customers generally only choose one processor for
        both types of transactions.103
The Commission’s assessment
(83)    Card processing includes all gateways concerning payment card transactions. Card
        processing services include acquiring processing services and issuing processing
        services. Acquiring processing services are required for merchant acquirers whereas
        issuing processing services are necessary for issuing banks. The activities of the
        Parties do not overlap in issuing processing.
(84)    Acquiring processing relates to the merchant-oriented side of technically processing a
        card payment transaction. It includes the network routing of payments towards the
        corresponding issuer and the POS authorisation.
(85)    The market investigation confirmed the argument of the Parties that the majority of
        customers source acquiring processing services for POS transactions and for web-
        enabled (e-commerce) transactions from the same supplier.104 In the same vein, the
        majority of customers considered that there are not significant differences between
        acquiring processing services for POS transactions and those for web-enabled
        transaction.105 Similarly, the large majority of suppliers indicated that they provide
        acquiring processing services for POS transactions and for web-enabled transactions
        and confirmed that, while there are some technical differences or differences
        concerning security requirements between both, they are not significant.106
(86)    The large majority of customers also indicated that their acquiring processing
        provider enables payments with all types of cards, including international and
        national card schemes, debit and credit cards and different card schemes such as Visa
        or Mastercard and that there are not significant differences between acquiring
        processing services for different types of cards.107 The large majority of suppliers
        also indicated that their acquiring processing services enable payments with all types
        of cards.108
(87)    Considering the results of the market investigation and in line with the Notifying
        Party’s views, the Commission considers that, for the purposes of this decision,
102 Form CO, paragraph 314.
103 Form CO, paragraph 315.
104 Responses to question 96 of Questionnaire Q2 to PSPs.
105 Responses to question 97 of Questionnaire Q2 to PSPs.
106 Responses to questions 111 and 112 of Questionnaire Q2 to PSPs.
107 Responses to question 98 and 99 of Questionnaire Q2 to PSPs.
108 Responses to question 113 of Questionnaire Q2 to PSPs.
                                                      23
 ---pagebreak---          acquiring processing is a separate product market and that no further segmentation is
         appropriate.
4.2.3.2. Geographical market definition
The Commission’s precedents
(88)     In its decisional practice, the Commission has previously left open whether the
         provision of payment card processing services, in general, and of acquiring
         processing services, in particular, is national or EEA-wide in scope.109
The Notifying Party’s view
(89)     The Notifying Party considers that the geographic scope for acquiring processing
         services is at least EEA-wide in scope, but considers that the market definition can be
         left open as it does not believe the Transaction raises concern for acquiring
         processing services under any geographic market definition.110
(90)     The Notifying Party indicates that acquiring processing is primarily an IT service that
         can be delivered from anywhere, and can be provided from data centres located in a
         different country than the customer. Additionally, it indicated that acquiring
         processing requirements are commoditised, and requirements are the same across
         EEA Contracting Parties. Finally, the Notifying Party indicates that major processors
         all operate across multiple EEA Contracting Parties, and that Directive 2015/2366
         contains “passporting” provisions that enable processors to provide services across
         the Union, further facilitating cross-border provision of acquiring processing
         services.111
The Commission’s assessment
(91)     The results of the market investigation support an EEA-wide market definition as
         regards acquiring processing services. The large majority of customers indicated that
         they procure acquiring processing services from acquiring processing providers
         established anywhere in the EEA.112 In this vein, the large majority of customers
         indicated that international acquiring processing providers can credibly supply all
         types of acquiring processing services to businesses in the territory of every EEA
         Contracting Party in which they are active.113 The majority of customers are also of
         the view that there are no significant barriers to procuring acquiring processing
         services at EEA level.114 The market investigation also revealed that the majority of
         providers offer acquiring processing in the territory of all EEA Contracting Parties or
         in a significant number thereof.115
109 See COMP/M.9452 - Global Payments/TSYS, decision of 16.09.2019, paragraphs 28-29; COMP/M.7873 -
    Worldline/Equens/PaySquare, decision of 20.04.2016, paragraphs 112-114; and M.7241 - Advent
    International/Bain Capital Investors/Nets Holding, decision of 8.07.2014, paragraphs 37-41.
110 Form CO, paragraphs 323 and 325.
111 Form CO, paragraph 325.
112 Responses to question 103 of Questionnaire Q2 to PSPs.
113 Responses to question 104 of Questionnaire Q2 to PSPs.
114 Responses to question 105 of Questionnaire Q2 to PSPs.
115 Responses to question 115 of Questionnaire Q2 to PSPs.
                                                       24
 ---pagebreak--- (92)    It results from the above that for the purposes of this decision the market for
        acquiring processing services should be considered as EEA-wide in scope.
(93)    The Transaction does not give rise to a horizontally affected market for acquiring
        processing services at EEA level. Therefore, these services will not be considered
        further in the competitive assessment of horizontal overlaps in this decision.
4.2.4. E-commerce acceptance services
4.2.4.1. Product market definition
The Commission’s precedents
(94)    The Commission has not yet considered the activity of e-commerce acceptance in its
        previous decisions.
The Notifying Party’s view
(95)    The Notifying Party submits that e-commerce acceptance services constitute a
        separate product market. As e-commerce payment transaction do not involve a
        physical POS terminal, customers need to select the payment method and enter their
        payment authentication details via a web page, i.e. an e-commerce acceptance
        solution.116
(96)    The Notifying Party considers that the market for e-commerce acceptance solutions
        is not part of the market for e-commerce merchant acquiring, as the service is
        different, e-commerce acceptance being a technical service and merchant acquiring a
        financial service. The Notifying Party submits that further subdivision of the e-
        commerce market is not appropriate.117
The Commission’s assessment
(97)    The market investigation supports the Notifying Parties views. In particular, a
        significant proportion of customers procure e-commerce merchant acquiring services
        separately from e-commerce acceptance services.118 The market investigation also
        suggests that no further segmentation is appropriate. The large majority of both
        customers and competitors indicated that e-commerce acceptance providers enable
        payments with all cards and that there are no significant differences between e-
        commerce acceptance services for different card types.119
(98)    It results from the above that, in line with the Notifying Party’s views, for the
        purposes of this decision, e-commerce acceptance is a separate product market and
        that no further segmentation is appropriate.
116 Form CO, paragraphs 197-198.
117 Form CO, paragraph 204.
118 Responses to question 79 of Questionnaire Q1 to Merchants.
119 Responses to questions 77 and 78 of Questionnaire Q1 to Merchants; responses to question 68, 69, 79 and
    80 of Questionnaire Q2 to PSPs.
                                                     25
 ---pagebreak--- 4.2.4.2. Geographical market definition
Commission’s precedents
(99)    The Commission has not yet considered the activity of e-commerce acceptance in its
        previous decisions.
The Notifying Party’s view
(100) The Notifying Party submits that, in line with the geographical market definition for
        e-commerce merchant acquiring and acquiring processing, e-commerce acceptance is
        an EEA-wide market as it is part of the same value chain.120
(101) The Notifying Party indicates that, on the supply side, e-commerce acceptance
        providers operate throughout the EEA and offer a single solution across countries.
        On the demand-side, merchants that are active across the EEA will typically search
        for a single provider of e-commerce acceptance services; locally active merchants
        have the possibility to choose a local provider or providers with presence across
        countries.121 The Notifying Party further submits that the proportion of e-commerce
        merchants involved in cross-border activities is significant, such that cross-border
        sales represent 20% of e-commerce sales,122 [...].123
The Commission’s assessment
(102) The market investigation supports the views of the Notifying Party as regards the
        EEA-wide scope of the market for e-commerce acceptance. The large majority of
        customers use EEA-wide procurement strategies or confirm that they could procure
        from players established anywhere in the EEA.124 Customers also confirm that
        international players can supply throughout the EEA and consider that there are no
        factors preventing them from procuring competitively across the EEA.125 Moreover,
        the majority of customers would switch to a player based elsewhere in the EEA if the
        price offered by a local (national) supplier were to increase by 5 to 10%.126 In
        addition, the majority of competitors indicated that they offer e-commerce
        acceptance services in all EEA countries. The majority of competitors consider that
        there are no significant barriers to offering e-commerce acceptance services in all the
        EEA.127 Indeed, competitors that are only active locally or in a few countries explain
120 Form CO, paragraph 208
121 Form CO, paragraphs 209-211.
122 Form CO, paragraph 213, referring to a report by Cross Border Commerce Europe, entitled “23% of
    ecommerce in Europe is cross-border” of 14.3.2019. This report covers 16 European countries: Austria,
    Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway,
    Portugal, Spain, Sweden, Switzerland and the UK.
123 Form CO, paragraph 218.
124 Responses to question 80 of Questionnaire Q1 to Merchants; responses to question 71 of Questionnaire Q2
    to PSPs.
125 Responses to question 81 and 82 of Questionnaire Q1 to Merchants; Responses to question 72 and 73 of
    Questionnaire Q2 to PSPs.
126 Responses to question 83 of Questionnaire Q1 to Merchants.
127 Responses to question 82 of Questionnaire Q2 to PSPs.
                                                     26
 ---pagebreak---         that not expanding their activities across the EEA is a strategic/commercial choice,
        rather than the result of any particular barriers.128
(103) It results from the above that for the purposes of this decision the market for e-
        commerce acceptance services should be considered as EEA-wide in scope.
(104) While both Parties offer these services, the Transaction does not give rise to a
        horizontally or vertically affected market of e-commerce acceptance services at EEA
        level. Such services will therefore not be further discussed in this decision.
4.2.5. In-store acceptance services
4.2.5.1. Product market definition
The Commission’s precedents
(105) The Commission has not yet considered the activity of in-store acceptance in its
        previous decisions.
The Notifying Party’s view
(106) The Notifying Party explains that in-store acceptance comprises the following set of
        services:129
        (a)     Concentration of transaction flows – providing a single remittance of
                transactions across various shops to the merchant acquirer once per day
                (instead of several transfers per day), to reduce costs for the merchant and
                simplify reporting;
        (b)     Multiple-acquirer switching – directing payment transactions to a specific
                merchant acquirer based on, e.g. the currency (currency-based switching) or
                based on the type of card (card-based switching). The latter is particularly
                relevant in France, Spain and in the United Kingdom, where card issuers also
                act as merchant acquirers, and transactions can be routed to the issuer that
                issued the card to reduce costs for the merchant;
        (c)     Reporting services – providing of reports such as, for example, revenues per
                day, per shop or per merchant acquirer.
(107) The Notifying Party considers that in-store acceptance services are only relevant to
        large retailers that rely on multiple merchant acquirers, and that the set of services,
        described above, are always provided by a single provider.
(108) The Notifying Party submits that in-store acceptance services constitute a separate
        product market distinct from merchant acquiring and acquiring processing and that
        no consider any further segmentation is appropriate.
128 Responses to question 81 of Questionnaire Q2 to PSPs.
129 Form CO, paragraph 294.
                                                     27
 ---pagebreak--- The Commission’s assessment
(109) In-store acceptance is a technical service that allows a merchant to optimise
        connection to multiple acquirers: it is a centralised platform that connects all POS
        terminals to all its merchant acquirers and allows concentration of transaction flows,
        multiple-acquirer switching or reporting services. In-store acceptance is not a
        mandatory technical service and is only provided to large retailers which have a
        significant volume of terminals and transactions for which optimisation of payment
        flows is necessary. The market investigation confirmed that a significant proportion
        of customers do not require in-store acceptance services at all and that those that do
        require in-store acceptance services procure them separately from other services such
        as merchant acquiring.130 Therefore, the Commission considers that in-store
        acceptance services constitute a market that is distinct from merchant acquiring and
        acquiring processing, the latter two being mandatory services, required by all types of
        customers.
(110) The market investigation did not provide any indication that any further subdivisions
        would be appropriate.
(111) It results from the above that, in line with the Notifying Party’s views, for the
        purposes of this decision, in-store acceptance services constitute a separate product
        market and that no further subdivision is appropriate.
4.2.5.2. Geographical market definition
The Commission’s precedents
(112) The Commission has not yet considered the activity of in-store acceptance in its
        previous decisions.
The Notifying Party’s view
(113) The Notifying Party considers that, on the supply side, in-store acceptance service
        providers are typically larger players with the required technical platforms and
        typically offer their services in multiple countries. On the demand side, the customers
        in the market only consists of large retailers, which typically have cross-border
        activity and source their in-store acceptance services for multiple countries from a
        single supplier.131
(114) The Notifying Party submits that the market is EEA-wide but that ultimately, the
        geographic market definition can be left open, as the Transaction does not raise
        competition concerns regardless of the geographic market scope, as the activities of
        the Parties only overlap in France.132
The Commission’s assessment
(115) The market investigation results support the finding that the market for in-store
        acceptance is EEA-wide in scope. The large majority of customers indicated that they
130 Responses to question 90 of Questionnaire Q1 to Merchants.
131 Form CO, paragraph 302-304.
132 Form CO, paragraph 305.
                                                     28
 ---pagebreak---         source in-store acceptance services from providers established anywhere in the EEA
        or that they could easily procure these services from in-store acceptance service
        providers anywhere in the EEA133. In this vein, the majority of customers indicated
        that international in-store acceptance service providers can credibly supply all types
        of in-store acceptance services to businesses in the territory of every EEA
        Contracting Party in which they are active. While local support is needed, many
        customers indicate that international players have the capabilities to offer such
        support.134 Moreover, while competitors identified some barriers to offering in-store
        acceptance services everywhere in the EEA such as local schemes, language barriers
        or consumer preferences, a large number of competitors indicated that they are able
        to provide in-store acceptance services at EEA level or at least in several countries in
        the EEA.135
(116) It results from the above that for the purposes of this decision the market for in-store
        acceptance services should be considered as EEA-wide in scope.
4.2.6. NSP services in Germany
(117) NSP services are a service that is specific to the German card payment system, and
        relates to the unique set-up of the German domestic Girocard scheme, which
        represents the majority of payment transactions in Germany.
(118) Girocard is a so-called “four-party scheme”, which involves the merchant, the card
        holder, a bank and an NSP (Netzbetreiber). The NSP provides services to the
        merchant including card acceptance, POS terminal provision and management, and
        routing of Girocard transactions to issuer banks. For international card schemes, the
        NSP routes the transaction to merchant acquirers, which can either be in-house or an
        external party. Figure 3 presents the set-up of the German Girocard scheme.
133 Responses to question 91 of Questionnaire Q1 to Merchants.
134 Responses to question 92 and 93 of Questionnaire Q1 to Merchants.
135 Responses to question 88 and 89 of Questionnaire Q2 to PSPs.
                                                      29
 ---pagebreak---        Figure 3: Set-up of the German Girocard scheme
       Source: Notifying Party
(119) There are 20 technical NSPs with NSP licenses in Germany. Most major technical
       NSPs also offer merchant acquiring services for international debit and credit cards
       (e.g. the Parties, Concardis, Evalon and CardProcess). The majority of customers
       single-source NSP services, although there are some customers that multi-source
       from different providers. In addition to Girocard transactions, technical NSPs also
       offer acceptance of payment by Elektronisches Lastschriftverfahren (“ELV”) /
       Online Lastschriftverfahren (“OLV”), types of account-to-account payments.
(120) Additionally, there are 80-120 commercial NSPs active in Germany, which account
       for 20-25% of all POS payments.136 Commercial NSPs are distinct from the technical
       NSPs mentioned above. Only the latter are certified NSPs and only they can provide
       technical Girocard acceptance. Without this certification any undertaking can act as a
       so-called “Girocard merchant concentrator” or “commercial NSP”, but needs to
       cooperate with a certified technical NSP to be active on the market. 137 Certification is
       obtained from Deutsche Kreditwirtschaft, which is the association of leading German
       banking-sector associations and the supervisory board of the German Banking
       Industry and which regulates Girocard.138 Commercial NSPs purchase network
       operating services from technical NSPs like Worldline and sell them to merchants in
       their own name and on their own account whereas their contracts with merchants
       relate to the POS rental part of the service only. Merchants also need to contract with
       the certified NSP player, given that payment transactions are handled by it (i.e. for
       the acceptance of transactions).139 Therefore, commercial NSPs could be regarded as
136 Form CO, paragraph 996.
137 Form CO, paragraph 1000.
138 Form CO, footnote 331.
139 Form CO, paragraph 1000.
                                                30
 ---pagebreak---         retailers of NSP services, which they procure from wholesale suppliers such as
        Worldline.
4.2.6.1. Product market definition
The Commission’s precedents
(121) The Commission has not previously considered the market for the provision of NSP
        services. The Commission has considered the related market for the provision of
        software for NSPs, which it found to be a separate product market. The Commission
        further considered a market for the provision of software for NSPs that rely on
        terminals using the ZVT-protocol, but left this question open.140
The Notifying Party’s view
(122) The Notifying Party considers that the market for NSP services in Germany is part of
        the larger market for merchant acquiring services in Germany.141
(123) The Notifying Party submits that non-cash payment methods, such as international
        cards, Girocard and ELV, are full substitutes of each other and NSP services and
        merchant acquiring services essentially offer the same core service, i.e. the ability to
        accept electronic payments. The Notifying Party further indicates that national
        schemes such as Girocard are under increasing competitive pressure and that
        international payment companies have entered the German market without offering
        support for the domestic payment methods.142
(124) Finally, the Notifying Party submits that if NSP services were to be considered a
        relevant product market, which it does not think is appropriate, it should encompass
        all market players (both “pure” NSPs and players offering NSP and merchant
        acquiring services) and both the Girocard and ELV payment methods, as it considers
        these fully substitutable.143
(125) Concerning a potential segmentation of NSP services into retail NSP and wholesale
        NSP services the Notifying Party is of the opinion that such segmentation would not
        be appropriate. In that regard the Notifying Party declares that although commercial
        NSPs purchase network operating services from technical NSPs like Worldline and
        sell them to merchants in their own name and on their own account, they can rather
        be considered as non-exclusive resellers or distributors of certified NSP services i.e.
        they distribute services from several certified NSP.144 Moreover, as far as pricing is
        concerned, certified NSPs such as Worldline or Ingenico provide a buy rate to the
        commercial NSPs for their transaction services they sell to merchants. POS terminals
        are purchased by the commercial NSPs and then rented to merchants. Commercial
        NSPs have the freedom of the sale price (sell rate) for transactions services and
        freedom of POS rental rate to merchants.145
140 See Case COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.4.2016, paragraphs 84-92.
141 Form CO, paragraph 339.
142 Form CO, paragraph 340-342.
143 Form CO, paragraph 343.
144 Form CO, paragraph 1000.
145 Form CO, paragraph 1002.
                                                31
 ---pagebreak--- The Commission’s assessment
(126) The market investigation was not conclusive as to whether a separate market for NSP
        services should be distinguished from a market for merchant acquiring in Germany.
(127) On the demand side, the results of the market investigation were mixed. A majority
        of merchants indicated that merchant acquirers and NSPs meet the same needs, but a
        still significant number considered that they do not.146 A majority of merchants
        procures NSP and merchant acquiring services together, but a still significant number
        procures them separately. Pricing and more flexibility were listed as reasons for
        procuring NSP and merchant acquiring services separately.147 The majority of
        merchants who procure both services together explained that they primarily choose
        the merchant acquirer and then request additional NSP services.148
(128) On the supply side, the overwhelming majority of respondents stated that they
        provide both NSP and merchant acquiring services.149 Moreover, suppliers indicated
        that NSP and merchant acquiring services meet the same customer needs and that
        there are similarities in the functions and processing steps of these services.150
        Therefore, they require the same resources from the service provider. But
        respondents also indicated that the licences and certifications required may be
        different. In this respect, it was noted that NSP services for Girocard require a
        network agreement with Deutsche Kreditwirtschaft, whereas merchant acquiring
        services require a regulatory licence from the German financial regulator BaFin.151
        Regarding security requirements, it was also mentioned that there is no difference
        between these services.152
(129) Furthermore, the market investigation did not reveal any indication that a sub-
        segmentation of NSP services would appropriately reflect market conditions. The
        majority of responding merchants do not generally request services separately for
        Girocard, ELV or international credit cards.153 The majority of merchants is also of
        the opinion that the different payment methods (Girocard, ELV/OLV and
        international credit cards) are regarded as substitutes by consumers for the majority
        of domestic consumer payments.154 This is supported by PSPs, the majority of whom
        stated that customers do not request services for payment acceptance selectively for
        only some of these three payment methods.155 Moreover, the majority of PSPs stated
        that they provide payment acceptance for Girocard, ELV/OLV and international
        credit card transactions alike as part of their NSP services.156
(130) The replies of PSPs are split over the question as to whether these three different
        payment methods serve different consumer needs. In that regard, it has been pointed
146 Responses to question 99 of Questionnaire Q1 to Merchants.
147 Responses to questions 100 and 100.1 of Questionnaire Q1 to Merchants.
148 Responses to question 100.2 of Questionnaire Q1 to Merchants.
149 Responses to question 121 of Questionnaire Q2 to PSPs.
150 Responses to question 122 of Questionnaire Q2 to PSPs.
151 Responses to question 122.1 of Questionnaire Q2 to PSPs.
152 Responses to question 122.1 of Questionnaire Q2 to PSPs.
153 Responses to question 101 of Questionnaire Q1 to Merchants.
154 Responses to question 102 of Questionnaire Q1 to Merchants.
155 Responses to question 124 of Questionnaire Q2 to PSPs.
156 Responses to question 123 of Questionnaire Q2 to PSPs.
                                                      32
 ---pagebreak---         out that Girocard and ELV/OLV transactions are cheaper for consumers. However, a
        majority is of the opinion that these payment methods can be substituted in a cost-
        effective and practicable manner for the majority of domestic consumer payments.157
(131) The market investigation among PSPs also revealed that it is appropriate to
        distinguish between the provision of NSP services at wholesale level, mainly to
        banks or commercial NSPs, and at retail level, with the majority of PSPs supporting
        such a distinction.158 One respondent noted that in this regard NSP services have
        different processes and different customer service requirements.159 However, the
        market investigation among PSPs also revealed that the provision of NSP services at
        wholesale level to banks and commercial NSPs is not considered as a separate market
        that is upstream of NSP services provided by banks or commercial NSPs. Banks and
        commercial NSPs are rather seen as a mere distribution channels by the majority of
        PSPs, albeit PSPs differed in their assessment of price setting freedom for the
        retailer.160 A minority was of the opinion that NSP services provided at wholesale
        level to banks and commercial NSPs are an alternative channel of distribution, and
        the customer, (distributing) bank or commercial NSP, does not play an important
        role. A minority was also of the opinion that NSP services at wholesale level to banks
        and commercial NSPs can be considered as an alternative channel of distribution,
        with some degree of freedom, in terms of retail pricing power in particular. An equal
        number was also of the opinion that NSP services at wholesale level to banks and
        commercial NSPs constitute a separate upstream market, where wholesalers would
        actively compete for customer banks or commercial NSPs, which subsequently enjoy
        a great degree of freedom to sell NSP services to their merchant customers. However,
        PSPs also stated in their majority that at retail level pricing policy can be set freely.161
(132) It results from the above, that for the purposes of this decision, NSP services may
        constitute a separate product market. Such a market would be comparable to the
        domestic POS merchant acquiring services in other countries, as mentioned in this
        decision, but also includes additional functions, specific to the German market.
        Therefore, for the purposes of this decision the plausible markets for POS merchant
        acquiring for international card transactions and one for NSP services with its
        specific functions for domestic card transactions in Germany are assessed separately,
        followed by a conclusion for the overall market for POS merchant acquiring in
        Germany. However, for the purposes of this decision, it can ultimately be left open
        whether NSP services and POS merchant acquiring in Germany constitute separate
        markets or whether they form an overall market including both types of services.
        This is because the competitive assessment did not reveal competition concerns for
        any respective market definition.
157 Responses to question 125 and 125.1 of Questionnaire Q2 to PSPs.
158 Responses to question 126 of Questionnaire Q2 to PSPs.
159 Responses to question 126.1 of Questionnaire Q2 to PSPs.
160 Responses to question 127 of Questionnaire Q2 to PSPs.
161 Responses to question 128.4 of Questionnaire Q1 to Merchants.
                                                      33
 ---pagebreak--- 4.2.6.2. Geographical market definition
The Commission’s precedents
(133) The Commission has not previously considered the market for the provision of NSP
        services. In its assessment of the related market of the provision of software for
        NSPs, the Commission found that the market is likely national in scope, but
        ultimately left the question open.162
The Notifying Party’s view
(134) The Notifying Party considers that the geographic dimension of the market for NSP
        services is national, it being a specificity of the German market.163
Commission’s assessment
(135) Since NSP services, and in particular the certification requirement with the Deutsche
        Kreditwirtschaft, are specific to the German market and since the provision of
        software for NSPs has been found likely to be national in scope in past decisional
        practice the German market for NSP services can be regarded as having a national
        dimension.
4.3.    Legal Framework
(136) Under Articles 2(2) and 2(3) of the Merger Regulation, the Commission must assess
        whether a proposed concentration would significantly impede effective competition
        in the internal market or in a substantial part of it, in particular through the creation
        or strengthening of a dominant position.
4.3.1. Horizontal mergers
(137) A merger can entail horizontal effects. In this respect, the Commission Guidelines on
        the assessment of horizontal mergers under the Council Regulation on the control of
        concentrations between undertakings (“the Horizontal Merger Guidelines”)164
        distinguish between two main ways in which mergers between actual or potential
        competitors on the same relevant market may significantly impede effective
        competition, namely (a) by eliminating important competitive constraints on one or
        more firms, which consequently would have increased market power, without
        resorting to coordinated behaviour (non-coordinated effects); and (b) by changing the
        nature of competition in such a way that firms that previously were not coordinating
        their behaviour are now significantly more likely to coordinate and raise prices or
        otherwise harm effective competition. A merger may also make coordination easier,
        more stable or more effective for firms that were coordinating prior to the merger
        (coordinated effects).165
162 See Case COMP/M.7873 - Worldline/Equens/PaySquare, decision of 20.04.2016, paragraphs 138-140.
163 Form CO, paragraph 347.
164 OJ C 31, 5.2.2004, p. 5.
165 Horizontal Merger Guidelines, paragraph 22.
                                                   34
 ---pagebreak--- 4.3.2. Non-horizontal mergers
(138) In addition, a merger can also entail non-horizontal effects when it involves
        companies operating at different levels of the same supply chain or in closely related
        markets. Pursuant to the Commission Guidelines on the assessment of non-horizontal
        mergers under the Council Regulation on the control of concentrations between
        undertakings (the “Non-Horizontal Merger Guidelines”)166, non-horizontal mergers
        do not entail the loss of direct competition between merging firms in the same
        relevant market and provide scope for efficiencies. However, there are circumstances
        in which non-horizontal mergers may significantly impede effective competition.
        This is in particular the case if they give rise to foreclosure. 167 In the assessment of
        non-horizontal mergers, the Commission distinguishes between two broad types of
        such mergers: vertical mergers and conglomerate mergers.
(139) Vertical mergers involve companies operating at different levels of the supply chain.
        For example, when a manufacturer of a certain product (the ‘upstream firm’) merges
        with one of its distributors (the ‘downstream firm’), this is called a vertical merger.
(140) Conglomerate mergers are mergers between firms that are in a relationship that is
        neither horizontal (as competitors in the same relevant market) nor vertical (as
        suppliers or customers). In practice, the Commission focusses on mergers between
        companies that are active in closely related markets (e.g. mergers involving suppliers
        of complementary products or products that belong to the same product range).
(141) In assessing potential vertical effects of a merger, the Commission analyses whether
        a merger results in foreclosure so that actual or potential rivals' access to supplies or
        markets is hampered or eliminated as a result of the merger, thereby reducing these
        companies' ability and/or incentive to compete. Such foreclosure may discourage
        entry or expansion of rivals or encourage their exit. Foreclosure thus can be found
        even if the foreclosed rivals are not forced to exit the market: It is sufficient that the
        rivals are disadvantaged and consequently led to compete less effectively. Such
        foreclosure is regarded as anti-competitive where the merging companies — and,
        possibly, some of its competitors as well — are as a result able to profitably increase
        the price charged to consumers.
(142) The Non-Horizontal Merger Guidelines distinguish between two forms of
        foreclosure.168 The first is where the merger is likely to raise the costs of downstream
        rivals by restricting their access to an important input (input foreclosure). The second
        is where the merger is likely to foreclose upstream rivals by restricting their access to
        a sufficient customer base (customer foreclosure
(143) In assessing both types of foreclosure, the Commission applies the ability, incentive,
        effects framework. This implies the assessment of whether (1) the merged entity
        would have the ability to engage in foreclosure, (2) it would have the incentive to do
        so, and (3) what would be the overall impact on effective competition in the affected
        markets.
166 OJ C 265, 18.10.2008, p. 6.
167 Non-Horizontal Merger Guidelines, paragraph 18.
168 Non-Horizontal Merger Guidelines, paragraph 30.
                                                    35
 ---pagebreak--- (144) The main concern in the context of conglomerate mergers is also that of foreclosure.
         The combination of products in related markets may confer on the merged entity the
         ability and incentive to leverage a strong market position from one market to another
         by means of tying or bundling or other exclusionary practices. Tying and bundling as
         such are common practices that often have no anticompetitive consequences.
         Companies engage in tying and bundling in order to provide their customers with
         better products or offerings in cost-effective ways. Nevertheless, in certain
         circumstances, these practices may lead to a reduction in actual or potential rivals'
         ability or incentive to compete. This may reduce the competitive pressure on the
         merged entity allowing it to increase prices.
(145) In assessing the likelihood of such a scenario, the Commission examines, first,
         whether the merged firm would have the ability to foreclose its rivals, second,
         whether it would have the economic incentive to do so and, third, whether a
         foreclosure strategy would have a significant detrimental effect on competition, thus
         causing harm to consumers. In practice, these factors are often examined together as
         they are closely intertwined.
4.4.     Overview of affected markets
(146) Worldline and Ingenico are both active in the provision of POS and e-commerce
         merchant acquiring services, manufacturing and supply of POS terminals, provision
         and management of POS terminals and related services, acquiring processing
         services, e-commerce acceptance services, in-store acceptance services and NSP
         services in Germany. As such, the Transaction gives rise to various affected
         markets.169
(147) The Transaction gives rise to the following horizontally affected markets:
         (a)      POS merchant acquiring services and possible segmentations in Austria,
                  Belgium, Germany and Luxembourg (Section 4.5.1 to 4.5.4);
         (b)      NSP services in Germany (Section 4.5.3.2);
169 An affected market consist of all relevant product and geographic markets, as well as plausible alternative
    relevant product and geographic markets, if in the EEA territory (a) two or more of the parties to the
    concentration are engaged in business activities in the same relevant market (“horizontal relationships”)
    and where the concentration will lead to a combined market share of 20% or more; or (b) one or more of
    the parties to the concentration are engaged in business activities in a relevant market, which is upstream
    or downstream of a relevant market in which any other party to the concentration is engaged (vertical
    relationships), and any of their individual or combined market shares at either level is 30% or more,
    regardless of whether there is or is not any existing supplier/customer relationship between the parties to
    the concentration. (See Annex 1, Section 6.3, Regulation (EC) No 802/2004 of 21 April 2004
    implementing the Merger Regulation OJ L 133, 30.4.2004, p. 1).
    The Commission may presume that concentrations where the market share of the undertakings concerned
    does not exceed 25% either in the common market or in a substantial part of it are not liable to impede
    effective competition and are compatible with the common market. (See paragraph 32 of the Merger
    Regulation and paragraph 18 of the Horizontal Merger Guidelines).
    The Commission is unlikely to find concerns in non-horizontal mergers, be it of a coordinated or of a non-
    coordinated nature, where the market share post-merger of the new entity in each of the markets concerned
    is below 30% and the post-merger HHI is below 2 000. Where a merged entity would have a market share
    just above the 30% threshold on one market but substantially below on other, related, markets competition
    concerns will be less likely. (See paragraph 25 of the Non-Horizontal Merger Guidelines.
                                                         36
 ---pagebreak---        (c)     Manufacturing and supply of POS terminals and possible segmentations in the
               EEA (Section 4.5.5);
       (d)     Provision and management of POS terminals in Austria, Belgium, Germany
               and the Netherlands (Section 4.5.6 to 4.5.9); and
       (e)     In-store acceptance services in the EEA (Section 4.5.10).
(148) Additionally, the Transaction also gives rise to the following non-horizontal
       relationships, which result in affected markets:
       (a)     Vertical effects – input foreclosure: Production and supply of POS
               terminals and possible segmentation (upstream) – Provision and management
               of POS terminals and possible segmentations / POS merchant acquiring
               services / NSP services (downstream) (Section 4.6.1.1);
       (b)     Vertical effects – customer foreclosure: Production and supply of POS
               terminals and possible segmentations (upstream) – Provision and management
               of POS terminals (downstream) (Section 4.6.1.2);
       (c)     Vertical effects – input foreclosure: Acquiring processing (upstream) – POS
               merchant acquiring and possible segmentations (downstream) (Section
               4.6.1.3);
       (d)     Conglomerate effects: Production and supply of POS terminals and possible
               segmentations – POS merchant acquiring services and possible segmentations
               (Section 4.6.2.1); and
       (e)     Conglomerate effects: Production and supply of POS terminals and possible
               segmentations – Acquiring processing services (Section 4.6.2.2).
4.5.   Competitive assessment of the horizontally affected markets
4.5.1. POS merchant acquiring in Austria
(149) The Parties’ and their main competitors’ market shares for POS merchant acquiring
       in Austria are provided below.
                                                37
 ---pagebreak---  ---pagebreak---         between card brands are largely covered by the segmentations between (i) credit and
        debit cards and (ii) domestic and international card schemes.172 The market
        investigation gave no indication that the Parties’ position varies significantly for any
        particular card brand or that the Transaction gives rise to competitive concerns
        specific to a single card brand. The Commission therefore considers that its
        assessment can be based on the overall market shares without there being a need to
        establish market shares by card brand segment.
The Notifying Party’s view
(153) The Notifying Party considers that the Transaction will not result in a significant
        impediment to effective competition on the POS merchant acquiring market in
        Austria for the reasons set out below.
(154) First, the Notifying Party considers that several credible local and international
        competitors are active on the Austrian market, including Card Complete,
        Concardis/Nets and Hobex. The Notifying Party emphasises that significant
        competitive pressure is exerted by German merchant acquirers on the Austrian
        market. As examples, it names Wirecard, Concardis/Nets in a partnership with
        Austrian telecom company A1, and Intercard. The Notifying Party submits that some
        merchants, particularly those active in tourism, prefer German merchant acquirers as
        those can offer acquiring for Girocard, the German domestic card scheme.173
(155) Second, the Notifying Party argues that the Parties’ market shares in the Austrian
        market are not static, but subject to significant client gains and losses, which
        illustrate the competitiveness of Austria’s market.174 The Notifying Party further
        indicates that they have had to lower prices in recent years as a consequence of this
        competition.175
(156) Third, the Notifying Party submits that customers contract merchant acquirers via
        multi-lateral commercial processes, including but not limited to tenders. The
        Notifying Party further submits that the Parties only meet on few occasions in these
        multi-lateral processes.176
(157) The Parties submit that the fact that they only meet on few occasions is evidence that
        they are not close competitors. According to the Parties, [...].177
(158) Fourth, the Notifying Party indicates that the Austrian market is characterised by
        strong merchants, [...], which exert significant countervailing buyer power.178
172 Annex U to the Form CO, paragraph 244.
173 Form CO, paragraphs 719-722 and Concept paper on Austria submitted by the Notifying Party on 5
    September 2020.
174 Form CO, paragraphs 724-725.
175 Concept paper on Austria submitted by the Notifying Party on 5 September 2020.
176 Form CO, paragraphs 730-732 and Concept paper on Austria submitted by the Notifying Party on 5
    September 2020.
177 Concept paper on Austria submitted by the Notifying Party on 5 September 2020.
178 Form CO, paragraph 733.
                                                      39
 ---pagebreak--- (159) Fifth, the Notifying Party submits that there are no significant obstacles to switching
        merchant acquirers in the Austrian market. In support of this, it presents its customer
        churn rates.179
(160) Sixth, the Notifying Party considers that the Austrian market has low barriers to
        entry, particularly as there is no domestic card network scheme, and because of
        harmonising regulation at EU level. This allows in particular German merchant
        acquirers to compete on the Austrian market. The Notifying Party explains that the
        Austrian market is attractive to foreign acquirers as it is fast-growing.180
The Commission’s assessment
(161) Worldline has had a strong market position in Austria pre-Transaction, with a market
        share of [40-50]% on the overall market for POS merchant acquiring (Austria does
        not have a domestic card network schemes, and therefore only the segment of
        international cards is relevant for the Commission’s assessment). The combination
        with Ingenico further strengthens this position to [50-60]% of the market; a
        significant increment of around [5-10]%. The combined market share level, being
        above 50%, is indicative of a dominant position of the merged entity. 181 The market
        is concentrated, with an HHI pre-Transaction exceeding 2 500. The Transaction
        increases this concentration and involves a significant HHI delta exceeding 900.
(162) The merged entity would have considerably more market power than its largest
        competitor, Card Complete, which has a market share of around 20%. The market
        investigation confirmed Worldline’s competitive strength, as both merchants and
        PSPs rated Worldline as the strongest merchant acquirer in Austria. Ingenico was
        also identified as a strong competitor, behind Worldline and Card Complete.
        Merchants additionally identified Adyen as a similarly strong competitor to Card
        Complete, even though it does not have a notable market share according to the data
        provided by the Notifying Party (Table 1). Therefore, the actual market power of
        Adyen for POS merchant acquiring in Austria may be lower than estimated by
        merchants.182
(163) Furthermore and contrary to what the Notifying Party submits, the market
        investigation indicated that the Parties are particularly close competitors in Austria.
        PSPs considered Ingenico the single closest competitor to Worldline and merchants
        considered Ingenico the closest competitor to Worldline together with Adyen. Card
        Complete, the largest player in Austria after Worldline, was named less often than
        Ingenico.183 The Notifying Party’s argument that [...] – is contradicted by the tender
        data provided by the Parties, which shows [...].184 The tender data additionally shows
        that the Parties met several times in tenders over the past years.
179 Form CO, paragraphs 734-737.
180 Form CO, paragraphs 740-741 and Concept paper on Austria submitted by the Notifying Party on 5
    September 2020.
181 Horizontal Merger Guidelines, paragraph 17.
182 Responses to question 30 of Questionnaire Q1 to Merchants; responses to question 26 of Questionnaire Q2
    to PSPs.
183 Responses to question 34 of Questionnaire Q1 to Merchants; responses to question 31 of Questionnaire Q2
    to PSPs.
184 Annex O to the Notifying Party’s reply to RFI 9 bis, dated 9 September 2020.
                                                       40
 ---pagebreak--- (164) While the market investigation confirmed that the majority of merchants see German
         merchant acquirers as a credible option in Austria, only Concardis/Nets was
         considered a relatively strong player, albeit weaker than the Parties. Other German
         merchant acquirers were not considered particularly strong competitors in Austria.185
         Moreover, the market shares provided by the Notifying Parties do not indicate a
         significant presence of any other German merchant acquirers on the Austrian market.
         The characterisation by the Notifying Parties that Concardis/Nets competes
         particularly aggressively in the Austrian market is not clearly supported by the tender
         data and market shares provided by the Notifying Party either. The tender data only
         show few wins by Concardis/Nets, and Concardis/Nets’ market shares in Austria
         appear to have remained more or less stable over the past three years. The
         Commission therefore considers that the market investigation could not confirm that
         the asserted “aggressive competition” and the collaboration with Austrian telecom
         provider A1, entered into in January 2019, translate in such an increased competitive
         pressure on the Parties in practice that it would replace the competitive pressure lost
         from the combination of Worldline with Ingenico.
(165) The market investigation gave mixed results on whether merchants consider that
         there are significant obstacles to switching to other providers of POS merchant
         acquiring services. Almost half the respondents indicated that they would not be able
         to change merchant acquirers in case of a SSNIP. Some merchants indicated that they
         would not be able to switch, as no other acquirer could meet their needs in Austria.186
         The Commission considers that this feedback, together with the switching rates
         reported by the Parties which are slightly lower than those in Germany, do not
         provide sufficient confirmation of the Notifying Party’s argument that there are no
         obstacles to switching in Austria.
Table 3: POS merchant acquiring customers won and lost by Worldline in Austria
between 2017 and 2019 (Source: the Parties)
“[...]”
(166) The large majority of PSPs that responded to the market investigation considered that
         insufficient choice of merchant acquirers would remain on the Austrian market post-
         Transaction. PSPs furthermore anticipated price increases, and a significant number
         indicated that they expect a negative impact of the Transaction on the quality of POS
         merchant acquiring services. One PSP indicated that they expect the Transaction to
         result in “reduced competition due to dominant size [of the merged entity] combined
         with declining service quality.”
(167) Merchants on the other hand were less concerned about choice, but gave mixed
         feedback on whether the Transaction’s impact on prices would be neutral or negative.
         In this context, one merchant noted that “i[f] no new [merchant acquirers] come[s]
         to Austria there are not many options.” 187
(168) The market investigation was not able to confirm that the barriers to entry for the
         Austrian market are low, as the Notifying Party argues. While many competing
185  Responses to question 30 of Questionnaire Q1 to Merchants.
186  Responses to question 25 of Questionnaire Q1 to Merchants.
187 Responses to questions 39 and 40 of Questionnaire Q1 to Merchants; responses to questions 37 and 38 of
     Questionnaire Q2 to PSPs.
                                                      41
 ---pagebreak---  ---pagebreak---  ---pagebreak---          have recently developed offers on the POS merchant acquiring market, such as
         Adyen and Mollie. 192
(179) Fifth, the Notifying Party submits that as a result of Regulation 2015/751,193
         interchange fees for different card payment schemes have largely been aligned.
         According to the Notifying Party, Maestro has since grown in the Belgian market and
         now effectively competes with Bancontact, the domestic scheme.194
(180) Sixth, the Notifying Party submits that strong competition in the Belgian market is
         evidenced by the decrease in prices over the last years. According to the Notifying
         Party, prices for SMEs have dropped between 1.8% and 26% from 2015 to 2019.195
(181) Seventh, the Notifying Party indicates that the Belgian market is characterised by
         strong countervailing buyer power of merchants.196
The Commission’s assessment
(182) The Belgian overall market for POS merchant acquiring pre-Transaction is already
         concentrated and characterised by a strong position of Worldline, with [70-80]%
         market share in 2019, which is indicative of dominance. The addition of Ingenico’s
         market share, albeit modest ([0-5]%), would further strengthen this already dominant
         position. The market is very concentrated, with an HHI pre-Transaction exceeding
         5 000. The Transaction increases this concentration and involves an HHI delta
         exceeding 350.
(183) While competition has increased somewhat since the opening of the Bancontact
         scheme to other acquirers than Worldline, respondents to the market investigation
         still considered Worldline by far the strongest merchant acquirer in Belgium.
         Ingenico was rated among the top three. One respondent indicates that the Belgian
         market is characterised by “extreme dominance of Worldline due to the historic
         market share.”197 Worldline’s dominance in the Belgian market is further illustrated
         by tender data provided by the Notifying Party. [...].198
(184) Furthermore, contrary to Worldline’s submission, Ingenico was mentioned most
         often as the closest competitor to Worldline by merchants responding to the market
         investigation.199 While, as the Parties put forward, Ingenico’s participation in tenders
         specific to Belgium is limited [...], Ingenico took part in several tenders that included
         Belgium in their scope. [...].
(185) The majority of merchants responding to the market investigation indicated they
         would switch in case of a price increase. However, many pointed out that this would
192 Form CO, paragraphs 805-806.
193 Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange
    fees for card-based payment transactions.
194 Form CO, paragraph 807-808.
195 Form CO, paragraph 809.
196 Form CO, paragraph 810.
197 Responses to question 31 of Questionnaire Q1 to Merchants; responses to question 27 of Questionnaire Q2
    to PSPs.
198 Annex P to the Form CO.
199 Responses to question 34 of Questionnaire Q1 to Merchants.
                                                     44
 ---pagebreak---           entail significant cost and takes time, e.g. as it is necessary to exchange POS
          terminals. Exchange POS terminals can be a significant cost and effort for retailers
          with a large installed base, such as grocery stores, as the terminals need to be
          interfaced with equipment such as the cashpoint and personnel need to be trained.200
          Additionally, the Commission notes that switching rates in Belgium provided by the
          Notifying Party are significantly lower in other national markets, such as Austria and
          Germany.
Table 6: POS merchant acquiring customers won and lost by Worldline in Belgium
between 2017 and 2019 (Source: the Parties)
[...]
(186) Respondents to the market investigation were able to mention several examples of
          recent entries into the Belgian POS merchant acquiring market. However, a
          significant amount of respondents characterised entry into the Belgian market as
          difficult or fairly difficult. One competitor pointed out that “The dominance of
          Worldline in the market makes entrance in the Belgian market a significant
          challenge.”201
(187) In terms of impact of the Transaction, a significant number of merchants and a large
          majority of PSPs that responded to the market investigation expected a negative
          impact on price. One merchant explained that “[i]f there is no increase on the short
          term, on the long term it will have a possible negative impact. [L]ess competition is
          normally the evolution to higher prices and less service”. Additionally, a vast
          majority of PSPs expected that choice would suffer.202 One PSP explains that “…the
          local Belgian POS Acquiring market will be even more dominated by one player in
          case no remediation actions are taken.”
(188) Several PSPs indicate that the Transaction would have a negative impact on their
          business in Belgium. One indicates that it expects the Transaction to stifle its growth:
          “We expect business growth to be slowed down due to the Transaction, as the
          dominant positioning of Worldline will be enhanced.” Another PSP indicated that the
          Transaction would reinstate Worldline’s dominant position on the Belgian market,
          and may result in the company not making its growth target and even be forced to
          exit the POS merchant acquiring market in Belgium.203 Some merchants were also
          concerned, with one indicating that “the Transaction may impact its negotiating
          power and therefore prices in the next tender procedure”.204
(189) In summary, the Transaction further strengthens the position of Worldline in the
          Belgian overall POS merchant acquiring market, in which it has already been
          dominant pre-Transaction. In addition, several market participants have indicated
          their concern with the effects of the Transaction with the competitive landscape in
          Belgium. As a result, the Commission considers that the Transaction raises serious
          doubts as to its compatibility with the internal market in relation to the market for
200   Responses to question 25 of Questionnaire Q1 to Merchants.
201   Responses to questions 35 and 37 of Questionnaire Q1 to Merchants; responses to question 33 of
      Questionnaire Q2 to PSPs.
202 Responses to question 40 of Questionnaire Q1 to Merchants; responses to question 38 of Questionnaire Q2
      to PSPs.
203 Non-confidential minutes of call with a PSP held on 20 March 2020.
204 Responses to question 39 of Questionnaire Q1 to Merchants.
                                                       45
 ---pagebreak---  ---pagebreak---  ---pagebreak--- The Commission’s assessment
(203) The Transaction gives rise to a new leading player on the plausible POS merchant
          acquiring market for international cards (as well as its potential segmentations by
          card brand and by credit / debit cards) by combining the second and third largest
          market players in Germany. On the POS merchant acquiring market for international
          cards, the Parties’ combined market share is around [40-50]% with an increment
          brought about by Worldline of just under 10%. The merged entity will be of similar
          size to the current market leader, Concardis/Nets, which has a market share of 30-
          40%. The market is moderately concentrated, with an HHI pre-Transaction exceeding
          2 000. The Transaction increases this concentration and involves an HHI delta of
          625.
(204) One the one hand, for Germany, the market investigation largely confirms the
          arguments put forward by the Parties.
(205) First, in line with what the Notifying Party submits, the market investigation
          confirmed that Concardis/Nets is a strong player in Germany, with respondents
          indicating that its competitive strength is similar to that of Ingenico (pre-
          Transaction). The market investigation further confirmed that Concardis/Nets is
          Ingenico’s closest competitor. Other competitors, such as Elavon and Adyen, were
          rated moderately strong as well, and were frequently included among the closest
          competitors for both Worldline and Ingenico.205
(206) Second, the market investigation partly supported the Notifying Party’s argument
          that APMs form a source of competition for merchant acquirers. While the market
          investigation confirmed that APMs are increasingly adopted by consumers,
          comments suggested that this is particularly the case for e-commerce transactions,
          and less so for POS merchant acquiring, which is assessed here.206
(207) Third, a vast majority of respondents indicate that they would switch merchant
          acquirer in case of a SSNIP.207 The switching data submitted by Ingenico, presented
          in the Table below, shows switching rates that are significantly higher than in
          Belgium and slightly higher than in Austria. This, in conjunction with the positive
          market investigation feedback on whether switching is possible, confirming the
          Parties arguments as regards switching.
Table 9: POS merchant acquiring customers won and lost by Ingenico between 2017
and 2019 (Source: the Parties)
[...]
(208) The tender data provided by the Parties show that tenders are particularly common in
          Germany. Ingenico participated in over [...] tenders over 2018 and 2019 for POS
          merchant acquiring for international cards. This further supports the Parties’
          arguments that merchants enjoy buyer power and that switching is possible.
205   Responses to questions 32 and 34 of Questionnaire Q1 to Merchants; responses to questions 27 and 31 of
      Questionnaire Q2 to PSPs.
206 Responses to question 38 of Questionnaire Q1 to Merchants.
207 Responses to question 25 of Questionnaire Q1 to Merchants.
                                                       48
 ---pagebreak--- (209) Finally, the large majority of both merchants and PSPs responding to the market
        investigation considered that sufficient choice of merchant acquirers would remain in
        the German market post-Transaction.208 Furthermore, the majority of respondents did
        not anticipate a negative impact on price, quality, choice or innovation.209
(210) On the other hand, a few respondents to the market investigation did expect a
        negative impact on their business as a result of the Transaction. However, these
        represented a small minority of respondents. Notably, one PSP that approached the
        Commission voiced the concern that the Transaction would enable the merged entity
        to commit an “efficiency offence”: due to the combined transaction volumes, the
        merged entity would be in the position to negotiate lower interchange fees with the
        issuing bank concentrators and therefore to offer significantly lower prices than
        competitors. The company in question is concerned that the cost efficiency of the
        merged entity will allow it to first undercut prices, drive competition out of the
        market and then recoup profits at a later stage.210 The PSP indicates that this concern
        especially pertains to interchange fees relating to NSP services, and will therefore be
        discussed in Section 4.5.3.2 of this decision.
(211) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to the
        plausible market for POS merchant acquiring for international cards in Germany as a
        result of horizontal non-coordinated effects. The Transaction does not raise serious
        doubts for the potential segmentations by card brand (see paragraph 152), or by
        credit/debit cards either, as the market positions of the Parties for these segments are
        similar as for the overall plausible market for POS merchant acquiring for
        international cards in Germany.
4.5.3.2. NSP services in Germany
(212) The Parties’ and their main competitors’ market shares for NSP services in Germany
        are provided below.
208 Responses to question 39 of Questionnaire Q1 to Merchants; responses to question 37 of Questionnaire Q2
    to PSPs.
209 Responses to question 40 of Questionnaire Q1 to Merchants; responses to question 38 of Questionnaire Q2
    to PSPs.
210 Non-confidential minutes of call with a PSP held on 8 April 2020.
                                                       49
 ---pagebreak---  ---pagebreak--- The Notifying Party’s view
(215) The Notifying Party is of the opinion that the Transaction will not impede
       competition on the market for NSP services mainly for the reasons set out below.213
(216) First, the Notifying Party submits that the increment brought by Worldline to the
       combined entity is limited (i.e. approximately [0-5]%) and materially less than the
       market share of other players such as First Data/Telecash, VeriFone via InterCard
       and VR Payment. The combined entity will also continue to face competition from
       their sizeable competitor First Data which has a market share of approximately [20-
       30]%.214
(217) Second, the Notifying Party considers that Worldline and Ingenico are not close
       competitors on the market for NSP services in Germany, with both Parties having
       widely differing market shares and targeting different clients; [...].215 Moreover,
       customer switching points to other competitors as being closer to Worldline.216
(218) Third, the Notifying Party is of the opinion that the market for NSP services is highly
       competitive with recent market entries and multiple competitors, like First
       Data/Telecash, VeriFone/InterCard, Concardis/Nets, VR Payment (CardProcess) and
       Elavon.217 According to the Notifying Party, this is also evidenced by the fluctuation
       of customers and in particular key accounts,218 which is further supported by short
       term contracts between acquirers/NSPs and merchants. To Ingenico’s knowledge, the
       duration of contracts is approximately [...].219 This intense and fierce competition is
       evidenced by strong price decreases in recent years [...].220
(219) Fourth, the Notifying Party submits that electronic payment methods in Germany are
       becoming increasingly interchangeable, with merchants in Germany being able to
       freely choose between ELV, Girocard and all other international schemes including
       Maestro as alternatives to Girocard. Thereby, the need for a licensed NSP provider
       becomes less important. According to the Notifying Party, from a merchant’s point of
       viewss, all payment methods compete against each other. If one payment method
       were to become significantly more expensive than the others, the merchant could
       substitute such payment method with an alternative.221
(220) Fifth, the Notifying Party submits that NSP services are characterised by low barriers
       to entry, in particular with respect to obtaining relevant certification for providing
       such services.222 According to the Notifying Party, the process to obtain a
       certification from the Deutsche Kreditwirtschaft to provide NSP services is
       straightforward and takes six to twelve months for an experienced payment provider,
213 Form CO, paragraph 969 et seq.
214 Form CO, paragraph 970.
215 Form CO, paragraph 972.
216 Form CO, paragraph 103 et seq.
217 Form CO, paragraph 982.
218 Form CO, paragraph 1020.
219 Form CO, paragraph 1009.
220 Form CO, paragraph 984.
221 Form CO, paragraph 985 et seq.
222 Form CO, paragraph 990.
                                               51
 ---pagebreak---        with no upfront payment needed.223 Cost and duration of the certification procedure
       do not constitute a barrier to entry. Moreover, without this certification any
       undertaking can act as a so-called “Girocard merchant concentrator” or “commercial
       NSPs” when it cooperates with a certified (technical) NSP to be active on the
       market.224
(221) Finally, the Notifying Party explains that the Transaction will not change the merged
       entity’s ability to negotiate interchange fees with the issuing bank concentrators and
       to benefit from a larger scale.225 In this respect, the Notifying Party puts forward the
       following arguments.
(222) In the first place, the Notifying Party explains that the ability to negotiate the
       interchange fee will not increase with the Transaction as each Party has already
       negotiated a rate. Issuing banks wish to grant such rebate to all NSP players to
       achieve their objective of promoting Girocard over other payment schemes.
       According to the Notifying Party, the combined entity will not be in a better position
       to negotiate lower authorization (interchange) fees with the issuing side (banks or
       bank concentrators) than prior to the Transaction.226
(223) In the second place, the Notifying Party is of the opinion that there are limited
       incentives for issuers to give a higher rebate to the Parties since the only real
       objective of these negotiations is to promote Girocard towards Maestro/Vpay without
       impacting their own revenue. Such an objective requires collaboration of as many
       NSP providers as possible and hence should lead to similar rebates granted to the
       various NSP providers.227
(224) In the third place, the Notifying Party explains that, in any event, the interchange fee
       is only one of the components of a pricing offer, which itself is only one component
       of a NSP’s service offer to merchants. Therefore, competitors who may have
       negotiated a different interchange fee could remain as competitive as they are today
       by using other parameters of competition.228
(225) In the fourth place, the Notifying Party states that [...].229
(226) The Notifying Party further submits that it does not consider commercial NSPs to be
       wholesale customers for NSP services.230 Although commercial NSPs purchase
       network operating services from technical NSPs (e.g. Worldline) and sell them to
       merchants in their own name and on their own account, the Notifying Party is of the
       opinion that they can rather be considered as non-exclusive resellers or distributors of
       certified NSP services i.e. they distribute services from several certified NSP.231 The
       Notifying Party further explains that merchants are contracting directly with
       commercial NSPs, but that such contracts relate to the POS rental part of the service
223 Form CO, paragraph 990.
224 Form CO, paragraph 995.
225 Form CO, paragraph 1021 et seq.
226 Form CO, paragraph 1027.
227 Form CO, paragraph 1029.
228 Form CO, paragraph 1031.
229 Form CO, paragraph 1034.
230 Form CO, paragraph 999.
231 Form CO, paragraph 1000.
                                                 52
 ---pagebreak---         only. Merchants also need to contract with certified NSP players, given that payment
        transactions are handled by it (i.e. for the acceptance of transactions) and commercial
        NSPs have to take this into account in their own contracts.232 Therefore, commercial
        NSPs are only indirect channels for certified NSPs to sell their services to
        merchants,233 and NSP services provided to merchants directly by certified NSPs and
        via commercial NSPs are exactly the same.234
The Commission’s assessment
(227) The Transaction has a limited structural impact on the plausible market for NSP
        services. Ingenico has a sizeable market share of [30-40]% or [30-40]% when only
        domestic card transactions are considered (and the routing of international cards is
        excluded), but the increment provided by Worldline is only [0-5]%, or [0-5]%
        respectively. Moreover, competitors remain available with individual market shares
        up to [20-30]%, which have remained relatively stable over time, as displayed in
        Table 10.
(228) In particular, the market shares in Table 10 show that Ingenico is the strongest
        market participant with a market share of [30-40]%, followed by First Data/Telecash
        with a market share of [20-30]%, Verifone (Intercard) with a market share of [10-
        20]%, VR Payment with a market share of 5 – 10% and Worldline with a market
        share of [0-5]% and a combined market share of [10-20]% for other market
        participants.
(229) PSPs also consider that the strongest players are (1) Ingenico and (2) First Data, but
        regard Concardis/Nets and Worldline as number 3 in the market and as equally
        strong.235 According to merchants Ingenico is the strongest service provider,
        followed by First Data and Worldline as number 3 and followed very closely by
        Verifone (Intercard).236 This outcome of the market investigation therefore confirms
        that First Data is a strong alternative supplier that is regarded as number 2 in the
        market. Regarding Worldline’s market position the outcome is not exactly in line
        with the market shares as provided in Table 10. However, regarding its market
        shares, Worldline would be number 4 or 5 in the market and therefore would still be
        close to the market position as perceived by merchants and PSPs. Furthermore,
        Worldline’s market share in the market of POS merchant acquiring is almost twice as
        high as in the market for NSP services, probably leading to a stronger perception and
        a possible overrating of Worldline’s market position in the NSP market.
(230) But even with this discrepancy with respect to Worldline’s perceived market
        position, the market investigation confirmed that there will remain sufficient credible
        competitors post-Transaction, according to the majority of merchants,237 a view also
        shared by the majority of PSPs.238 Moreover, it has been confirmed that there have
        been new entrants in the market in the last five years,239 and new entrants are
232 Form CO, paragraph 1000.
233 Form CO, paragraph 1001.
234 Form CO, paragraph 1004.
235 Responses to question 130 of Questionnaire Q2 to PSPs.
236 Responses to question 105 of Questionnaire Q1 to Merchants.
237 Responses to question 111 of Questionnaire Q1 to Merchants.
238 Responses to question 134 of Questionnaire Q2 to PSPs.
239 Responses to question 103 of Questionnaire Q1 to Merchants.
                                                      53
 ---pagebreak---         considered as credible suppliers by the majority of merchants,240 even despite the
        acknowledged obstacles for entering the market due to the certification process for
        technical NSPs.241 Concerning closeness of competition, merchants considered
        Worldline’s closest competitor to be Ingenico, which could be explained by
        Ingenico’s strong market position, whereas Ingenico’s closest competitors are Adyen
        and Concardis.242 This view is not supported by PSPs, who are of the opinion that for
        both Parties First Data is the closest competitor,243 which especially for Ingenico is in
        line with First Data’s market position as reflected in market shares and as perceived
        by merchants and PSPs, again stressing the importance of First Data in the market
        and as alternative provider of NSP services.
(231) Additionally, the market investigation confirmed the Notifying Party’s view that
        prices have decreased in the past years. Although a slight majority of merchants were
        of the opinion that prices remained constant over the past 5 years, almost an equal
        number replied that prices were decreasing,244 and were supported in this view by the
        majority of PSPs that also stated that prices decreased in the same time.245
(232) One competitor expressed its concerns that the merged entity may be in a position
        post-Transaction to negotiate better Girocard interchange fees.246 As a result, this
        competitor feared that these better conditions might be passed on to customers, which
        might enable the merged entity to drive out competitors with lower price offerings
        and subsequently raise prices. However, the Commission is of the opinion that the
        Notifying Party addressed this concern by the arguments laid out above.247 First, the
        small increment the Transaction will bring about will not impact the merger entity’s
        ability to negotiate better terms. Second, issuers of Girocard are incentivised to
        promote Girocard towards Maestro/Vpay without impacting their own revenue. Such
        an objective requires collaboration of as many NSP providers as possible and hence
        should lead to similar rebates granted to the various NSP providers. In this respect,
        the Notifying Party explains that currently Ingenico and Worldline [...]. Third, this
        fee is just one component of a NSP’s pricing offer. The Parties explain that the
        stream of revenues generated by interchange fees makes up approximately [...] of
        their revenues generated by their NSP services for 2019.248 Fourth, the Parties have
        [...]. The Commission is of the opinion that the arguments are convincing that the
        merged entity will not profit from the alleged behaviour, as put forward by the
        complainant. [...] it seems possible, that also smaller market participants can be
        competitive vis-à-vis stronger players. This holds all the more true since the
        interchange fee only makes up a small share of the Parties’ revenues and thus it can
        be assumed that there will be room to compete for other market participants.
        Furthermore, the market investigation revealed that there will be sufficient credible
        competitors post-Transaction and that market entry is possible. Therefore, if the
240 Responses to question 104 of Questionnaire Q1 to Merchants.
241 Responses to question 133.1 of Questionnaire Q2 to PSPs.
242 Responses to questions 106.1 and 106.2 of Questionnaire Q1 to Merchants.
243 Responses to question 131 of Questionnaire Q2 to PSPs.
244 Responses to question 108 of Questionnaire Q1 to Merchants.
245 Responses to question 132 of Questionnaire Q2 to PSPs.
246 Non-confidential Minutes of call with competitor on 8 April 2020.
247 Also Form CO, paragraph 1021.
248 Form CO, paragraph 1032.
                                                      54
 ---pagebreak---         merged entity would raise prices as part of the alleged strategy, competitors could be
        attracted and drive down prices.
(233) Concerning the Transaction’s impact on different parameters of competition, the
        majority of responding merchants are of the opinion that it will have no impact on
        price or quality of service. Concerning choice of service, the majority of respondents
        expects a neutral or positive impact. With respect to innovation, the majority also
        expects a neutral or positive impact.249 Accordingly, merchants also expressed
        neutral or positive views when asked about the expected impact on their business.250
        These views are mirrored in the replies of PSPs. The majority of PSPs expect a
        positive or neutral impact on price, quality of service, choice and innovation.251
        When asked about the impact of the Transaction on their own business, respondents
        were split equally between those that expect increased competition and those that
        expect reduced competition.252 However, the majority of PSPs or merchants
        responding did not expect any decrease in competition with respect to price, quality,
        choice or innovation. One PSP responded that as a result of the Transaction a
        significant number of its merchants’ terminals will be provided by a competitor
        which could potentially result in a commercial and technical disadvantage for this
        PSP.253 However, as explained in Sections 4.6.1.1 and 4.6.1.2 of this decision, there
        are no competition concerns in relation to vertical effects in this regard. Moreover, as
        both Parties to the Transaction are already competitors to other PSPs and this
        responding PSP, this potential disadvantage is only to a limited extent merger-
        specific. Furthermore, the Commission’s assessment under Section 4.5.3.1 showed
        that numerous credible competitors will remain in the market for the provision and
        management of POS terminals post-Transaction and additional entry and/or
        expansion by competitors is also expected.
(234) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to the
        plausible market for NSP services in Germany due to horizontal non-coordinated
        effects.
4.5.3.3. Conclusion for the overall market for POS merchant acquiring in Germany
(235) The market shares for the overall market for POS merchant acquiring in Germany are
        presented below. The market shares for the overall market do not differ materially
        from the shares in each of the segments.
249 Response question 112 of Questionnaire Q1 to Merchants.
250 Responses to question 113 of Questionnaire Q1 to Merchants.
251 Responses to question 135 of Questionnaire Q2 to PSPs.
252 Responses to question 136 of Questionnaire Q2 to PSPs.
253 Responses to question 136 of Questionnaire Q2 to PSPs.
                                                      55
 ---pagebreak---  ---pagebreak---  ---pagebreak---         from neighbouring countries, enabled by the lack of a domestic card network scheme
        in Luxembourg.257
The Commission’s assessment
(247) The Luxembourgish market for POS merchant acquiring (which is identical to the
        POS merchant acquiring market for international cards only, as Luxembourg does not
        have a domestic card scheme network) is extremely concentrated pre-Transaction,
        with the Notifying Party controlling [70-80]% of the market. The acquisition of
        Ingenico, among the largest competitors in terms of market share, result in a
        significant increment ([5-10]%) and a combined market share of [80-90]%. This
        combined market share is far above the threshold (50%) which is indicative of a
        dominant position of the merged entity.258 The market is very concentrated, with an
        HHI pre-Transaction exceeding 5 500. The Transaction increases this concentration
        and involves a very significant HHI delta exceeding 1 400.
(248) While the Parties submit that [...], this is not relevant (especially as a significant
        amount of merchants contracts POS merchant acquiring services for Luxembourg
        together with another country259) and the fact remains that Ingenico is amongst the
        largest competitors – and is potentially the single largest competitor – to Worldline.
        The only other competitor that comes close is Elavon, for which the Notifying Party
        estimates a market share between 5 and 10%. The Transaction would therefore only
        leave Elavon as a competitor with a market share above 5%.
(249) The market investigation confirmed the dominance of Worldline. Both merchants
        and PSPs indicated that Worldline is by far the strongest player in Luxembourg. One
        PSP mentioned that “[the] [m]arket [is] fully dominated by Worldline after take-over
        of SIX. Other players only have [a] marginal share.”260 Limited input was given in
        the market investigation on merchants’ ability to switch and the Parties’ switching
        rates were not provided for Luxembourg.
(250) Feedback of the market investigation on the closeness of competition between
        Worldline and Ingenico in Luxembourg was mixed. In addition to Ingenico,
        respondents named Adyen, CCV and BNP Paribas as close competitors to Worldline.
        However, Adyen, CCV and BNP Paribas do not have a notable market share
        according to the overview provided by the Parties (Table 13). Elavon, which has
        similar market share to the Parties, only received very limited mention. The Parties
        provided data for the largest 10 tenders in Luxembourg for 2018 and 2019, which
        show that [...]. The tender data provided represent approximately [a small
        proportion]% of Luxembourgish MSV in 2018 and [a small proportion]% in 2019.
        Data for international tenders show that [...]. The Commission considers that these
        results should be interpreted with the market structure in mind, as in the
        Luxembourgish POS merchant acquiring market it would be difficult for any player
        to be particularly close to a competitor as strong as Worldline.
257 Form CO, paragraph 1088.
258 See paragraph 17 of the Horizontal Merger Guidelines.
259 Responses to question 33.2 of Questionnaire Q1 to Merchants.
260 Responses to question 33 of Questionnaire Q1 to Merchants; responses to question 27 of Questionnaire Q2
    to PSPs.
                                                      58
 ---pagebreak--- (251) With regard to alternative payment methods, such as digital wallets and account-to-
        account payments, a majority of merchants responding to the market investigation
        indicate that these form an alternative to card payments. However, several
        respondents explain that this is particularly the case for e-commerce payments, and
        less so for in-store payments.261
(252) While the market investigation confirmed that many customers acquire their POS
        merchant acquiring services for Luxembourg in combination with POS merchant
        acquiring services for neighbouring countries,262 the market investigation also
        confirmed that there are few alternatives for Luxembourgish customers. Furthermore,
        the market investigation did not provide any indication that Worldline has less
        market power than suggested by its market shares.
(253) Market investigation feedback on the impact of the Transaction in Luxembourg was
        mixed. While a slight majority of merchants and PSPs expected a neutral impact on
        price and choice, a significant amount of respondents indicated that they anticipate a
        negative impact as well. One PSP explains that “[i]n Luxembourg Worldline is
        already so dominant that the transaction will have limited impact to an already
        highly non-competitive market.”263
(254) In light of the market structure in Luxembourg, which is characterised by strong
        dominance of Worldline and where Ingenico is one of two competitors with a market
        share above 5%, the Transaction prima facie is likely to give rise to competitive
        concerns as a result of the strengthening of Worldline’s dominant position. The
        market investigation was not able to allay these competition concerns, with a
        significant proportion of respondents anticipating negative impacts on choice and
        price. Furthermore, it cannot be excluded that those that expect a neutral impact do so
        because the market is “already highly non-competitive” today. As a result, the
        Commission considers that the Transaction raises serious doubts as to its
        compatibility with the internal market in relation to the market for POS merchant
        acquiring and relevant segmentations, namely by credit/debit cards (where the
        Parties’ positions are similar as for POS merchant acquiring in Luxembourg overall)
        or by card brand (see paragraph 152), in Luxembourg due to horizontal non-
        coordinated effects.
4.5.5. Manufacturing and supply of POS terminals in the EEA
Market structure
(255) The Parties and their main competitors’ market shares are provided in the Table
        below.
261 Responses to question 38 of Questionnaire Q1 to Merchants.
262 Responses to question 33 of Questionnaire Q1 to Merchants.
263 Responses to question 40 of Questionnaire Q1 to Merchants; responses to question 38 of Questionnaire Q2
    to PSPs.
                                                     59
 ---pagebreak---  ---pagebreak---                  Traditional POS and all POS Terminals, the competitive assessment would
                 not change.264
(257) For the reason laid out above, the Commission’s assessment in this decision will
        focus on the overall EEA market for the manufacture and supply of all POS
        terminals.
The Notifying Party’s view
(258) The Notifying Party argues that the Transaction will not result in any significant
        impediment to effective competition in particular due to the fact that: (i) the
        increment brought about by Worldline is low (less than 5%) and [a significant
        proportion] of Worldline sales are internal (i.e. relate to shipments to Worldline
        group entities); (ii) [...]; (iii) the Parties are not close competitors, in particular due to
        the fact that Ingenico competes more closely with global POS terminal manufacturers
        including VeriFone and PAX, as evidenced by tender data [...]; (iv) the market for the
        manufacturing and supply of POS terminals are tender-driven and customers multi-
        source POS terminals; (v) there is dynamic competition and entry, in particular from
        PAX and other Asian suppliers whose market share grew significantly in Europe; (vi)
        switching costs are low; and (vii) the market is evolving towards more commoditized
        products, in particular Android-based POS terminals.
The Commission’s assessment
(259) The Transaction has a limited structural impact on a market that has been historically
        relatively concentrated. The Parties’ combined market share exceeds 40% with an
        increment brought about by Worldline [0-5]%. The market is still relatively
        concentrated, with an HHI pre-Transaction exceeding 2 000. The Transaction
        increases this concentration and involves an HHI delta exceeding 300.
(260) However, considering only sales to third parties, which are more representative of
        competitive dynamics on the POS terminal manufacturing and supply as they may
        better show the preferences of customers as opposed to internal sales of vertically
        integrated players, Worldline’s market share would be halved, to around [0-5]% and
        the Parties’ market share would drop just below 40%. This in turn implies that the
        HHI delta of the Transaction would drop to approximately 150 (at 155.4), the
        threshold at which the Commission is unlikely to indicate horizontal competition
        concerns except under special circumstances.265
(261) The Parties and their main competitors’ shares on a market for POS manufacturing
        and supply limited to third parties are provided in the Table below.
264 Annex U to the Form CO, Section 1.
265 Paragraph 20 of the Horizontal Merger Guidelines. None of the special circumstances identified in this
    paragraph are met in relation to this market, as further detailed in this section.
                                                          61
 ---pagebreak---  ---pagebreak---          Ingenico are already losing a lot of legacy customers to whom they sold POS HW
         (because they seem them as competing in the acquiring space) and [the Transaction]
         will open up the space for more competition amongst market newcomers (combined
         with the collapse of Verifone, their traditional POS HW competitor). Relatively new
         market newcomers such as PAX will certainly benefit in terms of more POS HW
         sales, and other new market newcomers (such as Sunmi or NexGo) will try and enter
         the POS HW market. This ultimately benefits the acquirers and PSPs who buy
         terminals and deploy them to merchants”, and another one similarly states that “a
         merger will never be 1+1=2 but in this case it need to be considered that it will be
         1+1=1,5 which means that room is created for new competitors to deliver better and
         accurate services”.268
(266) In addition, Ingenico is not perceived by market players as being as innovative as
         PAX and some other Asian POS terminal manufacturers. 269
(267) Second, in line with the market share estimates provided by the Parties, Worldline is
         not among the top players in the manufacturing and supply of POS terminals in the
         EEA. Market analyst Nilson ranks Worldline as the ninth largest supplier of POS
         terminals in Europe, after Ingenico, VeriFone, Datecs, Spire, PAX, Newland, Castles
         and Yarus.270 Respondents to the market investigation typically consider in particular
         Ingenico, VeriFone and PAX as strongest suppliers, followed by other suppliers
         including Castles, CCV, Datecs, Poynt, Spire or Worldline.271
(268) Some market participants consider Worldline as one of the top three players on the
         market alongside Ingenico and VeriFone. However, they are a minority and are
         typically customers or competitors of the Parties in the Belgian or Benelux markets,
         where Worldline’s market position is much stronger than Ingenico’s market
         position.272 The local profile of Worldline in terms of POS terminal manufacturing is
         confirmed by a competitor which states that: “Worldline also manufactures devices,
         but is not a global player, focused mainly just on Benelux region in terms of
         hardware deployment […] they are certainly never considered a payment terminal
         hardware supplier by acquirers and payment service providers in other regions”.273
         However, for the reasons laid out in Section 4.2.2.1 above, for the purposes of this
         decision, the market for the manufacturing and supply of POS terminals is considered
         to be at least EEA-wide in scope and Worldline is not considered a strong supplier at
         EEA level.
(269) In addition, Worldline is not a new entrant nor has it been a particularly disruptive
         competitive force or maverick. Its market share has remained overall stable between
         [0-5]% and [0-5]% each year since 2015. This is unlikely to change in the
         foreseeable future, in particular due to the fact that the company is not perceived by
         market players as particularly innovative and therefore it is unlikely that its sales will
268 Responses to questions 61.1 and 62.1 of Questionnaire Q2 to PSPs.
269 Responses to question 64 of Questionnaire Q1 to Merchants; responses to question 57 of Questionnaire Q2
    to PSPs.
270 Annex K.1 to the Form CO, page 11. Note that the geographic scope does not strictly match the EEA
    territory.
271 Responses to questions 55.3 and 56.1 of Questionnaire Q2 to PSPs.
272 Responses to questions 59.1 of Questionnaire Q1 to Merchants.
273 Non-confidential version of an email from a competitor dated 16 June 2020.
                                                      63
 ---pagebreak---            increase significantly.274 This is also reflected in the Parties’ own internal documents.
           [...]”.275
(270) Furthermore, most of Worldline POS terminal shipments are shipped within the
           company and are thus of limited relevance for the purposes of the competitive
           assessment of the market for the shipment of POS terminals. As mentioned in
           paragraph 260 above, considering only sales to third parties, Worldline’s market
           share would be halved, to around [0-5]%.
(271) Third, there are no indications that the Parties would be particularly close
           competitors for the manufacturing and supply of POS terminals.
(272) The market investigation confirms the Notifying Party’s arguments that VeriFone is
           viewed as the closest competitor to Ingenico. In particular, market respondents
           indicate that Ingenico and VeriFone compete closely in particular in terms of their
           POS terminal product portfolio, prices, and geographic presence. However, contrary
           to the Parties’ claims, other “pure” POS terminal manufacturers, including PAX, are
           considered as equally close to Ingenico as this is the case for Worldline.276
(273) The fact that Worldline and Ingenico are not close competitors is also confirmed by
           tender data submitted by the Parties. This data indicates that [...].277 In fact, [...].278
(274) Fourth, there seems to be some degree of countervailing buyer power, in particular
           from large retailers, as well as PSPs (including banks) acting as distributors or
           merchant acquirers for the reasons set out below.
(275) Most customers (including both merchants and PSPs) engage in some form of
           competitive sourcing, either through tender processes or through bilateral
           negotiations with multiple POS terminal manufacturers, or purchase POS terminals
           via distributors who do.279
(276) In addition, customers who organise competitive tenders are typically the largest
           customers of POS terminals. [...].280
(277) The market investigation also indicated that important customers, and in particular
           large retailers, may also be able to extract better supply conditions from POS
           terminal manufacturers, further indicating the existence of some bargaining power.281
274 Responses to question 64 of Questionnaire Q1 to Merchants; responses to question 57 of Questionnaire Q2
    to PSPs.
275 Worldline document provided as Annex 22 of section 5(4) of the Form CO, slide 25.
276 Responses to question 61 of Questionnaire Q1 to Merchants; response to question 55.5 of Questionnaire
    Q2 to PSPs.
277 Annex L to the Form CO.
278 Responses to questions 51 and 51.1 of Questionnaire Q1 to Merchants; Responses to questions 53 and 53.1
    of Questionnaire Q2 to PSPs.
279 Responses to question 54 of Questionnaire Q1 to Merchants; responses to question 54 of Questionnaire Q2
    to PSPs.
280 [...].
281 Responses to questions 51 and 51.1 of Questionnaire Q1 to Merchants; Responses to questions 53 and 53.1
    of Questionnaire Q2 to PSPs.
                                                      64
 ---pagebreak--- (278) By contrast, the market investigation did not confirm the Notifying Party’s arguments
        that most customers multi-source POS terminals. In fact, a large majority of
        merchants responding to the investigation single-source for reasons including
        economies of scale or smoother integration with the merchant’s existing
        infrastructure (including electronic cash registers in particular).282 On the other hand,
        PSPs managing a POS terminal installed base typically multi-source, in particular to
        increase their bargaining power vis-à-vis POS terminal manufacturers, as well as for
        better stock management.283 This is particularly relevant since a large share of
        merchants, including large retailers, purchase POS terminals via distributors or
        merchant acquirers.284
(279) Fifth, there will remain enough credible manufacturers of POS terminals active on
        the market post-Transaction.
(280) Besides the Parties, there will remain at least a dozen other suppliers of POS
        terminals. Alternative suppliers to the Parties’ cited by respondents to the market
        investigation include VeriFone, PAX, Castles, CCV, Clover, Datecs, Poynt, Spire,
        First Data, Newland, NewPOS, Paytec, and XAC.285 A number of these players, and
        particularly PAX, are relatively recent entrants in the EEA market. PAX has achieved
        a market share of approximately [10-20]% and therefore is considerably bigger than
        Worldline despite being a recent entrant.
(281) In addition, some of these suppliers are perceived as more innovative than the
        Parties. Compared to other players, the Parties, and in particular Worldline, are not
        perceived as particularly strong innovators on the markets for POS terminals, in
        particular due to a weak Android terminal offering. Companies cited as innovative
        include primarily PAX, as well as, to some lesser extent VeriFone, Clover, Ingenico,
        iZettle, Castles and Adyen, but not particularly Worldline.286 Therefore, the Parties
        do not seem to have a more innovative offer that could help to increase their market
        shares. Rather, other competitors seem to have a more innovative offer that could
        help them to erode market shares from the Parties.
(282) The fact that there are credible competitors in the market and that there is active
        competition between them is further evidenced by lower POS terminal prices over
        the last years. Increased price competition and lower prices are also mentioned in the
        Parties’ internal documents. [...].287 [...].288
(283) Sixth, the market investigation confirms the Parties’ arguments on the global trend
        towards commoditisation of POS terminals, in particular due to the trend of Android-
        based POS terminals.
(284) A large majority of respondents, including both merchants and PSPs, consider that
        POS terminals are commoditised products and that most manufacturers are able to
282 Responses to questions 57 and 57.1 of Questionnaire Q1 to Merchants.
283 Responses to question 55.2of Questionnaire Q2 to PSPs.
284 Responses to question 54 of Questionnaire Q1 to Merchants.
285 Responses to question 55.3 of Questionnaire Q2 to PSPs.
286 Responses to question 64 of Questionnaire Q1 to Merchants; responses to question 57 of Questionnaire Q2
    to PSPs.
287 Worldline document provided as Annex 16 of section 5(4) of the Form CO, slide 36.
288 Ingenico document provided as Annex 16 of section 5(4) of the Form CO, slide 10.
                                                      65
 ---pagebreak---          offer a similar product range.289 Regarding Android POS terminals specifically,
         respondents to the market investigation generally consider that offering Android-
         based terminals is important.290 In that respect, merchants consider PAX as the
         primary supplier of Android-based POS terminals, even if Ingenico and VeriFone are
         also mentioned by a (lower) number of respondents, and Worldline even less so.291
         PAX is also considered as the primary supplier of Android-based terminals by PSPs,
         alongside other Asian suppliers including Castles, Clover, and Poynt. Only one PSP
         mentions Worldline as a top provider and none mention Ingenico.292
(285) The trend towards commoditisation of POS terminals is also reflected in the Parties’
         internal documents. [...].293
(286) Lastly, the overwhelming majority of merchants, as well as the majority of PSPs,
         indicate that the Transaction will have a neutral or positive impact in the market for
         the manufacturing and supply of POS terminals.294
(287) Based on the above, the Commission considers that the Transaction does not raise
         serious doubts as to its compatibility with the internal market in relation to the market
         for the manufacturing and supply of POS terminals in the EEA, including its
         potential segmentation by type of POS terminal, due to horizontal non-coordinated
         effects.
289 Responses to question 52 of Questionnaire Q1 to Merchants; responses to question 51 of Questionnaire Q2
    to PSPs.
290 Responses to question 65 of Questionnaire Q1 to Merchants; responses to question 58 of Questionnaire Q2
    to PSPs.
291 Responses to question 65.1 of Questionnaire Q1 to Merchants.
292 Responses to question 58.1 of Questionnaire Q2 to PSPs.
293 Ingenico document provided as Annex 14 of Section 5(4) of the Form CO, slide 1.
294 Responses to question 69 of Questionnaire Q1 to Merchants; responses to question 62 of Questionnaire Q2
    to PSPs. Among those who expect a negative impact of the Transaction of a horizontal nature, most
    concerns expressed relate to either: (i) the combination of the two largest suppliers to the Belgian market
    as a result of the Transaction, which as explained is of limited relevance considering the scope of the
    relevant market is at least EEA wide; (ii) a rationalization of the product lines, which is not necessarily
    anticompetitive in itself; and/or (iii) general statements according to which a concentration results in a
    decrease in competition, which are not further substantiated. Non-horizontal concerns expressed are further
    discussed in Section 4.6 below.
                                                         66
 ---pagebreak---  ---pagebreak--- (291) The Transaction has a significant impact on a market that is relatively concentrated
        pre-Transaction. The Parties’ combined market share exceeds [50-60]%, which is in
        itself indicative of a likely dominant position,297 with an increment brought about by
        Ingenico close to [5-10]%. The market is relatively concentrated, with an HHI pre-
        Transaction exceeding 2800. The Transaction strongly increases this concentration
        and involves an HHI delta exceeding 900. The market shares of the Parties are
        relatively stable over the last three years and there are only three additional sizeable
        competitors active in the market.
(292) With regard to the provision and management of POS specifically, the feedback
        provided is also overall in line with that provided for POS merchant acquiring
        services.
(293) While merchants responding to the market investigation generally indicate that
        sufficient alternative players will remain active on the provision and management of
        POS terminal services in Austria, when asked to provide comments about Austria
        specifically, the only merchant who expressed a view indicated that they will need to
        look for alternatives if the two largest suppliers in Austria (i.e. the Parties) merge.298
        In addition, half of the responding merchants and a majority of responding PSPs
        expect a negative impact of the Transaction, in particular on prices.299
(294) Based on the above, the Commission considers that the Transaction raises serious
        doubts as to its compatibility with the internal market in relation to the market for the
        provision and management of POS terminals in Austria due to creation of a dominant
        position.
297 Paragraph 17 of the Horizontal Merger Guidelines.
298 Responses to question 71.1 of Questionnaire Q1 to Merchants.
299 Responses to question 72 of Questionnaire Q1 to Merchants; Responses to question 66 of Questionnaire
    Q2 to PSPs.
                                                      68
 ---pagebreak---  ---pagebreak---         for the reasons laid out in Section 4.5.2 above, the Transaction raises serious doubt as
        to its compatibility with the internal market in relation to the market for POS
        merchant acquiring.
(299) In addition, while Worldline’s market share has indeed decreased over the last years,
        [...], and the company’s share remains in excess of 60%, which according to settled
        case law is indicative of a dominant position on the market.
(300) Moreover, the market investigation consistently identified Worldline and Ingenico as
        the top two players in the provision and management of POS terminals in Belgium,
        far ahead of other players such as CCV and Loyaltek.301
(301) Lastly, while respondents to the market investigation indicate that a sufficient
        number of alternative players will remain active on the market in Belgium,302 a
        material share of the responding merchants and virtually all responding PSPs expect
        a negative impact of the Transaction in Belgium, in particular on prices.303 Some
        indicate that the merged entity may even be able to unilaterally define / degrade the
        level of service offered to merchants, stating that “[i]t is to be expected that WL &
        Ingenico will dominate the Belgian market even more than before. Therefore they
        can set the boundaries of what is the minimum or maximum base of delivered service
        to the merchant”. 304
(302) Based on the above, the Commission considers that the Transaction raises serious
        doubts as to its compatibility with the internal market in relation to the market for the
        provision and management of POS terminals in Belgium due to the strengthening of
        a dominant position as a result of horizontal non-coordinated effects.
301 Responses to question 72 of Questionnaire Q1 to Merchants; responses to question 66 of Questionnaire Q2
    to PSPs.
302 Responses to question 70 of Questionnaire Q1 to Merchants; responses to question 63 of Questionnaire Q2
    to PSPs.
303 Responses to question 70 of Questionnaire Q1 to Merchants; responses to question 63 of Questionnaire Q2
    to PSPs.
304 Response to question 62.1 of Questionnaire Q2 to PSPs.
                                                      70
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---         shares of the Parties in France, the only country in which their activities overlap, are
        [40-50]% with an increment of [0-5]%.
The Notifying Party’s view
(318) The Notifying Party argues that the Transaction will not result in any significant
        impediment to effective competition in particular due to the fact that: (i) Worldline
        only brings about an immaterial increment; and (ii) Worldline only offering this
        service in France and to a handful of customers.
The Commission’s assessment
(319) The combined market shares of the Parties in the EEA remain below 40% with a
        limited increment brought by Worldline of [0-5]%. In addition, there remain three
        competitors with market shares significantly above the increment - VeriFone,
        Toshiba and ACI are all more than two times the size of Worldline. Moreover,
        although the market is EEA-wide in scope, Worldline is only active in France with a
        moderate share of supply in France ([0-5]%), where five competitors have a share of
        supply higher or similar to Worldline (VeriFone, Monext, Nepting, ACI and Adyen)
        and therefore will constrain the merged entity post-Transaction.
(320) The market investigation confirmed that the overwhelming majority of customers
        consider that post-Transaction, there will remain sufficient choice of credible
        suppliers providing in-store acceptance services.310 In the same vein, the large
        majority of customers are of the view that the Transaction will have a positive or
        neutral impact on the EEA market for in-store acceptance in terms of price or quality
        of the services. The large majority consider that the impact on innovation will be
        positive. For completeness, customers also consider that the impact of the
        Transaction will be positive or neutral in France with regard to price or quality and
        positive with regards to innovation.311 Similarly, the overwhelming majority of
        suppliers, consider that post-Transaction, there will remain sufficient choice of
        credible suppliers providing in-store acceptance service in the EEA and in France.312
        Competitors also consider that the impact of the Transaction in terms of prices,
        quality of the services and innovation will be neutral or positive in the EEA and in
        France.313
(321) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to the market
        for the provision of in-store acceptance services in the EEA due to horizontal non-
        coordinated effects.
310 Responses to question 95 of questionnaire Q1 to Merchants, question 95.
311 Responses to question 96 of questionnaire Q1 to Merchants, question 96.
312 Responses to question 91 of questionnaire Q2 to PSPs, question 91.
313 Responses to question 92 of questionnaire Q2 to PSPs, question 92.
                                                      74
 ---pagebreak--- 4.6.     Competitive assessment of the non-horizontally affected markets
4.6.1. Vertical effects
4.6.1.1. Manufacturing and supply of POS Terminals (upstream) – Provision and
           management of POS terminals/POS merchant acquiring services/NSP services
           (downstream) - Input foreclosure
(322) The Parties manufacture and supply POS terminals to competing PSPs active on the
         provision and management of POS terminals and/or POS merchant acquiring markets
         throughout the EEA (as well as to NSPs in Germany specifically). The markets for
         the provision and management of POS terminals314 and POS merchant acquiring
         services are strongly interrelated. In fact, as mentioned in Section 4.2.2, in some
         countries (i.e. in Austria) the market for the provision and management of POS
         terminals to merchants may form part of a single market including POS merchant
         acquiring services. Moreover, the management of POS terminals is often
         complemented by POS merchant acquiring services. While in some countries both
         services can be procured separately, in others (e.g. Austria), POS terminals are
         typically supplied alongside POS merchant acquiring services. PSPs offering POS
         management and/or POS merchant acquiring services need to have access to POS
         terminals (upstream market). Regarding NSP services, it should be taken into account
         that “pure” NSPs have been on the decline in Germany and today virtually every
         NSP also offers POS merchant acquiring services in Germany. Accordingly, given
         that the base of customers for POS terminals is virtually the same across merchant
         acquiring and NSP services in Germany, as are the Parties’ market shares in these
         two markets, the assessment is similar. In any event, this Section includes an
         assessment of input foreclosure of POS terminals (upstream) to suppliers of POS
         management and/or POS merchant acquiring services and/or NSP services.
(323) In fact, the market investigation indicates that many merchants acquire POS
         terminals from their merchant acquirer. Therefore, merchant acquirers are one of the
         main sources of POS terminals for merchants.315 One POS terminal manufacture
         notes for instance that “merchant acquirers provide the main channel for distribution
         of POS terminals to large retailers and SMEs”.316 In fact, a substantial number of
         responding PSPs raised concerns in relation to the merged entity engaging in an input
         foreclosure strategy for POS terminals.
(324) As a result, the risks that the Transaction would give rise to potential vertical effects
         and in particular, would give the Parties the ability and incentives to engage in a
         successful input foreclosure strategy will be addressed in this Section.
The Notifying Party’s view
(325) The Notifying Party argues that the Transaction will not result in any significant
         impediment to effective competition in particular due to the fact that: (i) the Parties
         will not have the ability to affect the competitiveness of rival merchant acquirers by
314 As explained in Section 4.5.6, the market structure and the combined market shares of the Parties would
    not change significantly in the EEA between Traditional POS and all POS Terminals. Therefore for this
    section, only a market comprising all POS terminals will be considered.
315 Responses to question 54 of Questionnaire Q1 to Merchants.
316 Non-confidential Minutes of a call with a competitor held on 17 June 2020, paragraph 28.
                                                       75
 ---pagebreak---         increasing the prices of POS terminals, in particular due to the presence of multiple
        competing POS terminal manufacturers, that would be able to serve additional
        demand quickly, the fact that POS terminals are commoditized products and the
        Parties’ POS terminals are not “must-have” products; (ii) the Parties will also not
        have the ability to decrease quality, in particular by degrading the interoperability of
        their POS terminals and the services of rival merchant acquirers; and (iii) the merged
        entity would not have the incentive to foreclose access to its terminals, as
        demonstrated by an economic analysis conducted by the Parties for the relevant
        markets.
The Commission’s assessment
(326) For input foreclosure to be a concern, the vertically integrated firm resulting from the
        merger must have a significant degree of market power in the upstream market.317
        The Commission firstly recalls that the combined share of the Parties in the
        manufacture and provision of POS has decreased consistently over recent years and
        amounted to [40-50]% in 2019. For the reasons set out in Section 4.5.5 above, it is
        unlikely that the merged entity will benefit from a significant degree of market power
        in relation to the manufacturing and supply of POS terminals in the EEA, in
        particular due to the presence of many competitors on the market, including recent
        entrants such as PAX, which are perceived as more innovative than the Parties, and
        with a strong offering of Android-based POS terminals.
(327) In addition, the market investigation indicates that it is unlikely that the merged entity
        would have the ability to foreclose rivals, be it by completely stopping supply of POS
        terminals to rival POS merchant acquirers or NSPs, by increasing prices or by
        degrading interoperability of POS terminals with competitors’ services.
(328) First, in relation to a full input foreclosure by ceasing to supply POS terminals to
        competing rivals, the Commission notes that the Parties’ competitors already supply
        around [60-70]% of POS terminals at EEA level. There are no indications that any of
        those competitors would face capacity constraints and would not be in a position to
        increase supply should the merged entity reduce its supply of POS terminals at EEA
        level. Indeed, the large majority of respondents to the market investigation indicated
        that post-Transaction there will remain a sufficient number of credible suppliers of
        POS terminals and a significant number of suppliers indicated that they have plans to
        expand their sales of POS terminals.318
(329) Second, in relation to potential price increases to raise rivals’ costs, it is important to
        note that Ingenico’s top customers for POS terminals are large payment service
        providers [...]. Moreover, the sales price of Ingenico’s POS terminals has steadily
        been decreasing in recent years as a result of pressure from rivals and the fact that its
        customers have a degree of countervailing buyer power (as explained in Section
        4.5.5). This is confirmed by the Parties’ internal documents, [...]:319
        [...]
317 Paragraph 35 of Non-Horizontal Merger Guidelines.
318 Responses to questions 56 and 60 of Questionnaire Q1 to Merchants.
319 Ingenico document provided as Annex 11 to Section 5(4) of the Form CO, slide 6.
                                                      76
 ---pagebreak--- (330) The addition of Worldline, which only sells limited volume of POS terminals to
        competing POS merchant acquirers ([...]% of the company’s total sales of POS
        terminals in the EEA) and has a low [...] market share in the manufacture and supply
        of POS terminals (less than [0-5]%) is unlikely to increase the pricing power of the
        merged entity materially vis-à-vis POS merchant acquirers or NSPs.
(331) Third, in relation to interoperability specifically, the Parties confirmed that neither
        Worldline       nor      Ingenico       own      proprietary protocols  ensuring     the
        connection/interoperability between POS terminals and POS merchant acquirers in
        the EEA, or any intellectual property rights over these protocol (including for
        instance the C-TAP, ZVT, EP2, CB2 and CB2A protocols).320
(332) None of the proprietary protocols owned by the Parties is relevant to ensure
        interoperability of the POS terminals and POS merchant acquiring services. The only
        protocol owned by Worldline in relation to POS terminals is the VIC Protocol, which
        is only deployed in Belgium and ensures communication between the POS terminal
        and the customer’s ECR system. One respondent nonetheless indicates that “for the
        Belgian market till integration is a huge driver of interoperability. The dominance of
        the Worldline-owned VIC protocol is a significant barrier”.321 However, the VIC
        protocol is not licensed out to any merchant acquirer (or to any competing POS
        terminal manufacturer). Ingenico also owns proprietary ECR protocols but these are
        deployed in Germany and not relevant in the Benelux region. As a result, the
        Transaction would in any event have no impact on competitors, who already have no
        access to the VIC protocol pre-Transaction. In addition, other competing POS
        terminal manufacturers also own other relevant protocols.322 Likewise, the
        Commission’s investigation has not identified any proprietary protocols owned by
        the Parties that would give rise to concerns in relation to the interoperability of POS
        terminals with NSP services.
(333) Furthermore, in countries where the Parties have a strong market presence
        downstream, and in particular the Benelux countries and Germany, there are open
        protocols that ensure the interoperability of POS terminals and acquiring services.
        These include the C-TAP protocol in the Benelux countries, and the ZVT protocol in
        Germany. These are particularly widespread; for instance, the C-TAP protocol is
        estimated to cover 90% of the POS installed base in Belgium and the Netherlands,
        and 100% of POS terminals shipped by Ingenico’s in Belgium use this protocol,
        whereas all transactions processed by Worldline in the Netherlands use this
        protocol.323 The same respondent who raises concerns in relation to Worldline’s VIC
        protocol also acknowledged that “C-TAP protocol is a multi-acquirer protocol
        dominating the Belgian market. Any terminal provider willing to be active in the
        Belgian market should be able to implement this protocol. However this protocol is
        governed by a separate instance – Acquiris - and therefore should not be considered
        a major issue”. Another respondent confirms that while “[t]erminal protocols are
        rarely interoperable - i.e. merchants can not freely switch to other suppliers of
        merchant acquiring services / these suppliers can not independently access the
320 Response to RFI 9, question 1.
321 Responses to question 59.1 of Questionnaire Q2 to PSPs.
322 Response to RFI 12, question 4.
323 Response to RFI 9bis to the Parties
                                                      77
 ---pagebreak---         terminals. […] The dominant protocol in Benelux (the CTAP protocol) then is
        interoprable (sic) - i.e. any CTAP acquirer has access to any CTAP terminal”.324
(334) The Parties have no controlling influence over the standard setting bodies for the C-
        TAP and ZVT protocols, which are managed by industry associations, including
        many members besides the Parties.325
(335) As a result, it is unlikely that the merged entity would have the ability to engage in an
        input foreclosure strategy post-Transaction, either by ceasing to supply POS
        terminals to competing POS merchant acquirers or NSP service providers, increasing
        prices or by degrading interoperability.
(336) Furthermore, even if the merged entity had the ability to engage in a foreclosure
        strategy, it would be unlikely that it would have the incentives to do so. In order for
        the merged entity to have the incentives to engage in a foreclosure strategy, it would
        be necessary that the upstream profit loss from customers switching to competing
        POS providers were sufficiently small compared with the profit gain from customers
        switching to the Parties’ provision and management of POS terminals or POS
        merchant acquiring services (or NSP services) downstream.
(337) The economic paper submitted by the Parties326 argues that the merged entity will not
        have the incentives to foreclose access to its POS terminals as this strategy would
        generate large losses due to massive foregone sales. It further argues that the new
        entity would need to increase its fees on the downstream market for POS merchant
        acquiring by an unrealistic amount in order to recoup these losses (and this analysis
        also includes the provision and management of POS terminals and NSP services).
        Having reviewed the submission, the Commission considers that it shows that, in the
        event of vertical foreclosure, the intensity of competition in the POS terminals
        market is such that the profit loss in the upstream market could not realistically be
        compensated by an increase in merchant services charges downstream.327 Therefore,
        it is unlikely that the merged entity would have the incentives to engage in a
        foreclosure strategy in these market.
(338) The Commission, having reviewed the arguments put forward by the Parties,
        considers that the economic paper follows a sound methodology and is in line with
        the principles of the Non-Horizontal Merger Guidelines in the way it compares the
        upstream profit loss with downstream profit gain (in light of diversion of customers)
        from a vertical foreclosure strategy.328
(339) In addition, the fact that the merged entity would retain some incentive to ship POS
        terminals to competing merchant acquirers is further evidenced by the fact that pre-
        Transaction Ingenico already ships terminals to merchant acquirers in countries
        where they are also active in POS merchant acquiring. This is in particular the case in
        Germany, where Ingenico is the leading player downstream, as well as in Austria and
        Belgium, where it has a material market presence in POS merchant acquiring.
324 Responses to question 59.1 of Questionnaire Q2 to PSPs.
325 Response to RFI 9bis to the Parties.
326 Annex T to the Form CO.
327 Response to RFI 15.
328 Paragraphs 40-46 of the Non-Horizontal Merger Guidelines.
                                                      78
 ---pagebreak--- (340) Further, as regards NSP services, as outlined in Section 4.5.3.2 above, the increment
        resulting from the Transaction is small (less than 5%), so the Transaction is unlikely
        to materially increase the incentive of the merged entity to engage in input
        foreclosure.
(341) As a result, it is unlikely that the merged entity would have the incentives to engage
        in an input foreclosure strategy post-Transaction.
(342) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        vertical effects in relation to the markets for the manufacturing and supply of POS
        terminals (upstream) and provision and management of POS terminals (downstream)
        or POS merchant acquiring services (downstream) or NSP services (downstream) in
        the EEA.
4.6.1.2. Manufacturing and supply of POS terminals (upstream) – POS merchant acquiring /
          NSP services / Provision and management of POS terminals (downstream) –
          Customer foreclosure
(343) The Parties procure POS terminals from competing POS terminal manufacturers and
        offer them to clients as part of their POS management and merchant acquiring
        services throughout the EEA.
(344) In particular, the Parties purchase POS terminals from competing manufacturers for
        their activity in the provision and management of POS terminals in: Austria,
        Germany and Poland for Worldline (from manufacturers including [...]), as well as in
        Austria, Belgium, Germany and the Netherlands for Ingenico (from manufacturers
        including [...]). In addition, [...].
(345) Some market respondents raised concerns relating to the fact that such purchases
        would stop post-Transaction. One competitor notes for instance that in terms of POS
        terminals shipments “[the Company] is concerned that Ingenico being the largest
        POS terminal hardware provider, the Transaction would prevent [the Company]
        from selling POS terminals to the combined entity and their merchant base”.329
(346) As a result, the risk that the Transaction would give rise to potential vertical effects
        and, in particular, would give the Parties the ability and incentives to engage in a
        successful customer foreclosure strategy, will be addressed in this Section. For the
        reasons laid out in Section 4.2.2, the market for the manufacturing and supply of POS
        terminals is at least EEA-wide and the assessment of customer foreclosure should be
        carried out at that level rather than at a narrower (e.g. national) level.
The Notifying Party’s view
(347) The Notifying Party argues that the Transaction will not result in any significant
        impediment to effective competition in particular due to the fact that (i) the merged
        entity purchases only very limited quantities of POS terminals from third party
        suppliers in the EEA, and (ii) POS terminal manufacturers are global firms with
        significant sales worldwide.
329 Non-confidential Minutes of a call with a competitor held on 17 June 2020, paragaph 26.
                                                       79
 ---pagebreak--- The Commission’s assessment
(348) A vertical merger may affect upstream competitors by increasing their cost to access
        downstream customers or by restricting access to a significant customer base.330
(349) In the present case, the merged entity cannot be considered to represent a significant
        customer base for competing manufacturers and suppliers of POS terminals at the
        upstream level. The Parties’ purchases only represent a marginal share of POS
        terminals shipped in the EEA:
        (a)      In 2019, Worldline procured [...].
        (b)      Similarly, in 2019 Ingenico procured [...].
(350) Post-Transaction, the merged entity would thus procure around [a small
        proportion]% of POS terminals shipped by third party POS manufacturers in the
        EEA, representing less than [a small proportion]% of total shipments in the region.
(351) As a result, it is unlikely that the merged entity would have the ability to engage in a
        customer foreclosure strategy post-Transaction.
(352) In addition, the fact that the merged entity would retain some incentive to procure
        POS terminals from competing manufactures is evidenced by the fact that pre-
        Transaction both Worldline and Ingenico already procure terminals for their installed
        base in countries where they are strong players in POS merchant acquiring, NSP
        services or POS provision and management including Austria, Belgium and
        Germany. In fact, strong customer preferences drive the incentives to procure POS
        terminals from competing manufacturers. In this regard, the Parties explained that
        [...]. Indeed, Austria is historically a Member State where VeriFone, formerly
        Hypercom, is the market leader, and is rewarded by strong consumer preference. 331
(353) As a result, it is unlikely that the merged entity would have the incentives to engage
        in a customer foreclosure strategy post-Transaction.
(354) Finally, any customer foreclosure strategy would only have a limited impact (if any)
        on the relevant markets. The market investigation revealed indeed that only a
        minority of POS terminal manufacturers consider that there will not remain a
        sufficient pool of customers post-Transaction. The few who indicated that there
        might not remain a sufficient pool of customers have only had limited sales to the
        Parties pre-Transaction and would thus likely not be heavily impacted by any
        customer foreclosure strategy.332
(355) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        vertical effects in relation to the markets for the manufacturing and supply of POS
        terminals (upstream) and merchant acquiring / NSP services / the provision and
        management of POS terminals (downstream) in the EEA.
330 Paragraph 60 of the Non-Horizontal Merger Guidelines.
331 Form CO, paragraph 743.
332 Response to question 61.2 of Questionnaire Q2 to PSPs.
                                                      80
 ---pagebreak--- 4.6.1.3. Acquiring processing (upstream) – POS merchant acquiring / e-commerce merchant
          acquiring (downstream) – Input foreclosure
(356) Certain merchant acquirers do not handle the acquiring processing, the technical
        handling and routing of a payment transaction, in-house. When merchant acquirers
        procure their acquiring processing from a third party, a vertical relationship may
        exist. Worldline and Ingenico both perform acquiring processing in-house to meet
        their entire internal needs and do not source acquiring processing from the market.
        Therefore, customer foreclosure will not be assessed in this decision. However,
        Worldline provides acquiring processing services for third parties. An input
        foreclosure assessment is therefore presented below. Both Parties are active in the
        downstream markets for POS merchant acquiring and e-commerce merchant
        acquiring.
The Notifying Party’s view
(357) The Notifying Party argues that the Transaction will not result in any significant
        impediment to effective competition in particular due to the fact that (i) the merged
        entity lacks power in the upstream market, (ii) the presence of alternative significant
        suppliers and (iii) the lack of incentive to foreclose.
The Commission’s assessment
(358) For input foreclosure to be a concern, the vertically integrated firm resulting from the
        merger must have a significant degree of market power in the upstream market.333
        For the reasons laid out below, it is unlikely that the merged entity will benefit from a
        significant degree of market power in relation to acquiring processing. Moreover, the
        merged entity would lack incentives to pursue a foreclosure strategy.
(359) First, the merged entity will not have the ability to foreclose customers of acquiring
        processing services. Ingenico does not provide acquiring processing services to third
        parties. Therefore, the Transaction does not increase the ability of the merged entity
        to foreclose customers. Moreover, at EEA level, in a market comprising both
        transactions processed internally and to third parties, the Parties’ combined market
        share was [10-20]% in 2019 in terms of number of transactions with a very limited
        increment from Ingenico ([0-5]%). On a market consisting of only transactions
        processed by third parties, the merged entity holds an EEA-wide market share of [30-
        40]% in terms of number of transactions, without any increment, as Ingenico only
        performs acquiring processing for own transactions. Customers and competitors
        responding to the market investigation confirmed that the merged entity will continue
        to be constrained by a large number of major, credible providers in the EEA, such as
        First Data, FIS, Adyen, Elavon, Evo, Wordpay, Barclays, SIA, Nets or Wirecard. In
        fact, only two customers identified Worldline among the top three suppliers of
        acquiring processing services in the EEA; indeed, customers mentioned First Data
        more often than Worldline as one of the three largest suppliers and competitors
        mentioned WorldPay more often.334 In this vein, the large majority of customers
        consider that post-Transaction, there will remain sufficient choice of credible
        suppliers providing acquiring processing services in the EEA.335 Finally, the large
333 Paragraph 35 of the Non-Horizontal Merger Guidelines.
334 Responses to questions 106 and 117 of Questionnaire Q2 to PSPs.
335 Responses to question 107 of Questionnaire Q2 to PSPs.
                                                      81
 ---pagebreak---         majority of customers and competitors are of the view that the Transaction will have
        a neutral or positive impact in terms of price, choice, quality and innovation in the
        market for acquiring processing and consider that the Transaction will not have any
        impact on their own businesses.336 Therefore, at EEA level, the merged entity would
        not have the ability to foreclose access to acquiring processing services.
(360) Second, the Transaction does not materially change the incentives to pursue a
        foreclose strategy. [...] of the transactions processed by Worldline for third parties
        originate from France, the Netherlands, and Italy, where merchant acquirers are,
        exclusively or mostly, banks. Because of this, the merged entity has very low market
        shares on the downstream national POS merchant acquiring markets in these
        countries. More specifically, the combined market shares in the downstream market
        (value) are [0-5]% in the Netherlands, [0-5]% in France and [0-5]% in Italy, with a
        very limited increment, always below [0-5]%. In these countries, a foreclosure
        strategy would be unprofitable. Refusing to provide processing services to merchant
        acquirers would result in losses that cannot be recouped through a realistic margin
        increase on the national POS merchant acquiring market or through a realistic
        increase of market shares downstream. Therefore, the Transaction does not materially
        change the incentives of the merged entity to foreclose customers, as the merged
        entity achieves [the large majority]% of its third party acquiring processing
        transactions in countries in which in the downstream market the increment is always
        below [0-5]% and the combined market shares are limited. With regard to e-
        commerce merchant acquiring, the merged entity would also lack the incentives to
        foreclose, considering its limited market share in the EEA ([0-5]%).
(361) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        vertical effects in relation to the markets for acquiring processing services (upstream)
        and merchant acquiring for POS terminals or e-commerce merchant acquiring
        (downstream) in the EEA.
4.6.2. Conglomerate effects
(362) The Transaction gives rise to conglomerate relationships between the Parties’
        activities.
4.6.2.1. Production and supply of POS Terminals – POS merchant acquiring services / NSP
          services
(363) In the event that merchants procure POS terminals directly from the manufacturer
        and additionally buy POS merchant acquiring services (or NSP services),
        conglomerate effects between the two are conceivable. In the event that the merchant
        would procure (or rent) its POS terminals via a merchant acquirer, the relationship
        would instead be of a vertical nature (see Section 4.6.1.1)
The Notifying Party’s view
(364) The Notifying Party submits that a conglomerate link between production and supply
        of POS terminals and POS merchant acquiring services (or NSP services) only exists
336 Responses to questions 108, 109, 118 and 119 of Questionnaire Q2 to PSPs.
                                                     82
 ---pagebreak---         for merchants who buy their POS terminals from the manufacturers, i.e. typically
        large merchants. SMEs typically buy or rent their POS terminals from their merchant
        acquirer/NSP, together with POS merchant acquiring services (or NSP services), in
        which case the linkage is of a vertical nature (this vertical linkage is discussed in
        Section 4.6.1.1 of this decision).337
(365) The Notifying Party argues that conglomerate effects are therefore only relevant for
        those (large) merchants that procure POS terminals and POS merchant
        acquiring/NSP services from the same company (that is both a POS terminal
        manufacturer and a merchant acquirer/NSP). The Notifying Party argues that no
        significant group of large merchants that meets this characterisation exists, as large
        merchant organise separate tenders for these two products and are not willing to
        single-source.338
(366) In support of this argument, the Parties provide several examples for Belgium,
        Germany and Luxembourg, where significant proportions of large merchants source
        POS terminals and POS merchant acquiring in separate tenders, and in some cases
        choose to procure them from different suppliers. 339
(367) The Notifying Party further submits that non-proprietary protocols exist in Belgium
        (CTAP protocol) and Germany (ZVT protocol) which further facilitate switching of
        POS terminal providers and merchant acquirers. For Luxembourg, the Notifying
        Party submits that Worldline’s POS merchant acquiring and POS terminals are
        already de facto technically tied, due to the use of the EP2 protocol, which is not
        compatible with competing merchant acquirers in Luxembourg.340 Therefore, no
        merger-specific conglomerate effects can take place.341
The Commission’s assessment
(368) The merged entity will offer POS terminals and merchant acquiring services for POS
        terminals, as well as NSP services in Germany. Considering that some customers
        purchaser both products, the Transaction gives raises to a conglomerate relationship.
        The merged entity could conceivably leverage its position on POS merchant
        acquiring (and/or NSP services in Germany) into the POS terminals market or vice
        versa. The Commission notes that both Worldline and Ingenico already offered both
        products pre-Transaction. Conglomerate effects may result in foreclosure when the
        merged entity has the ability and incentive to leverage a strong market position from
        one market to another. For instance, the merged entity may expand its position on the
        POS merchant acquiring/NSP market by using its advantage on the POS terminals
        market. Conversely, it may strengthen its strong position on the POS terminals
        market by bundling it with acquiring/NSP services.
(369) With regard to the possibility of leveraging its position in the POS merchant
        acquiring market, the Commission notes that during the market investigation, few
        PSPs voiced the concern that post-Transaction the merged entity could leverage its
337 Annex T to the Form CO, paragraph 92.
338 Annex T to the Form CO, paragraph 96.
339 Annex T to the Form CO, paragraphs 100-101 and 104-106.
340 Competing merchant acquirers in Luxembourg are primarily German acquirers and likely use the ZVT
    protocol.
341 Annex T to the Form CO, paragraphs 103, 107 and 111.
                                                    83
 ---pagebreak---         strong position in merchant acquiring to strengthen its position in the supply of POS
        terminals by forcing merchants to use POS terminals produced by the merged entity.
        According to one of the PSPs, the merged entity will hold a very strong position in
        the POS merchant acquiring market in the EEA, in excess of 50%, and if the merged
        entity would not allow merchants to use hardware from competing POS terminal
        manufacturers, a large proportion of the European market will not be accessible to
        the latter, increasing the merged entity’s market power.342
(370) As regards a foreclosure strategy, whereby the merged entity would leverage any
        market power from its position in merchant acquiring, the Commission firstly notes
        that the merged entity will control significantly less of the POS merchant acquiring
        space than estimated in the complaint: the Notifying Party estimates that the Parties’
        combined share in overall POS merchant acquiring at EEA level represents [0-5]%
        and the results of the market investigation did not provide any reason to doubt the
        reliability of these estimates. Thus the merged entity would clearly lack the ability to
        engage in conglomerate foreclosure strategies relying on its market position in
        overall POS merchant acquiring at EEA level (and, in any event, the POS merchant
        acquiring market is national, as outlined in Section 4.2.1 above).
(371) Looking at national level, the merged entity would have market shares above 50% in
        Austria, Belgium and Luxembourg for POS merchant acquiring. In Germany the
        Transaction also gives rise to an affected market in merchant acquiring, however as
        discussed in Section 4.5.3, the merged entity will not have a significant degree of
        market power in this market. The same holds true for the market of NSP services in
        Germany.
(372)    For Austria, Belgium and Luxembourg, despite the high market shares in POS
        merchant acquiring, the market investigation did not provide any indication that the
        merged entity could successfully implement a strategy that would significantly
        increase the risk of anti-competitive tying and bundling. The majority of respondents
        to the market investigation confirmed that they use competitive procurement
        processes such as bilateral negotiation with multiple suppliers or tender process and
        that those customers that purchase POS terminals directly from the manufacturer
        typically procure merchant acquiring services and POS terminals in separate
        processes.343 Any tying strategy is therefore unlikely to succeed.
(373)    This lack of ability and/or incentives to bundle the products is further evidenced by
        the fact, as described in Section 4.6.1.2, that pre-Transaction both Worldline and
        Ingenico already procure terminals from rival third party POS terminal suppliers for
        their installed base in countries where the Parties are strong players in POS merchant
        acquiring or NSP services, including Austria, Belgium and Germany. It follows that
        even in countries where the Parties are strong in POS merchant acquiring/NSP
        services, they have been unable and/or lacked the incentive to bundle POS merchant
        acquiring services and POS terminals and even for customers purchasing both
        products, the Parties had to offer POS terminals from competing suppliers to
        merchants due to strong customer preferences. Therefore, the Commission considers
        that it is unlikely that the merged entity would have the ability or incentive to
342 Responses to question 40 of Questionnaire Q2 to PSPs.
343 Responses to question 55 of Questionnaire Q2 to PSPs and Responses to questions 43 and 54 of
    questionnaire Q1 to Merchants.
                                                     84
 ---pagebreak---         leverage its market position on the merchant acquiring/NSP services markets to
        bundle the provision of this service with the supply of POS terminals.
(374) Moreover, even if the merged entity were to implement a bundling or tying strategy
        in Austria, Belgium and/or Luxembourg, which is unlikely for the reasons set out
        above, the effects on the EEA market for the supply of POS terminals would be very
        limited. Indeed, the market for the supply of POS terminals is EEA wide in scope,
        and Austria, Belgium and Luxembourg account for only a fraction of the total EEA
        market size for the supply of POS terminals. It follows that competitors would not
        lose a significant share of their sales of POS terminals in the EEA.
(375) Additionally, as explained in Section 4.6.1, the merged entity will not have the ability
        to degrade interoperability, as it does not control proprietary protocols to do so.
        Therefore, it is unlikely that the merged entity could engage in a technical tying
        strategy or that any such attempted strategy would be successful.
(376) Moreover, the merged entity would have a limited ability to engage in a foreclosure
        strategy relying on its market position in the manufacture and supply of POS
        terminals. The merged entity would have a market share of [40-50]% on the EEA-
        wide market for manufacturing and supply of POS terminals and as discussed in
        Section 4.5.5 the merged entity will not have a significant degree of market power in
        this market. In fact, the large majority of respondents to the market investigation
        indicated that post-Transaction there will remain a sufficient number of credible
        suppliers of POS terminals and a significant number of suppliers indicated that they
        have plans to expand their sales of POS terminals.344
(377) As mentioned above, the market investigation also confirmed the Parties’ argument
        that customers tend to use competitive procurement processes and that those
        customers that purchase POS terminals directly from the manufacturer typically
        procure merchant acquiring services and POS terminals in separate processes.345 Any
        tying strategy is therefore unlikely to succeed.
(378) Therefore, considering that (i) the merged entity will lack market power in the EEA-
        wide market for manufacturing and supply of POS terminals and in the space of POS
        merchant acquiring/NSP services in the EEA, including at national level, (ii) there
        are a number of alternative credible suppliers for POS terminals in the EEA and (iii)
        customers use competitive process to procure POS terminals and procure separately
        from merchant acquiring/NSP services, the merged entity will not be able to leverage
        its position in the POS terminal market to bundle POS terminals with POS merchant
        acquiring/NSP services.
(379) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
        conglomerate effects in relation to the markets for the manufacturing and supply of
        POS terminals and its potential segmentations and POS merchant acquiring and its
        potential segmentations as well as NSP services in Germany.
344 See section 4.6.1.1.
345 Responses to question 55 of Questionnaire Q2 to PSPs and Responses to questions 43 and 54 of
    questionnaire Q1 to Merchants.
                                                   85
 ---pagebreak--- 4.6.2.2. Production and supply of POS terminals – Acquiring processing services
(380) Banks that provide merchant acquiring services at retail level may be customers for
        POS terminals and acquiring processing services, meaning that conglomerate effects
        are generally conceivable for the two markets.
The Notifying Party’s view
(381) The Notifying Party argues that the Transaction will not result in any significant
        impediment to effective competition in particular due to (i) the fact that the merged
        entity lacks power in the production and supply of POS terminals and in the
        provision of acquiring processing services; (ii) the presence of alternative significant
        suppliers in both markets; and (iii) the fact that both markets are weakly related given
        that banks usually source both products from different suppliers or through different
        tenders processes and that the demand for these products originates from different
        entities within banks.
The Commission’s assessment
(382) The ability to foreclose relies on the merged entity having a significant degree of
        market power in one of the markets concerned and on one of the products being
        viewed as particularly important, for instance because of a lack of alternatives or in
        the presence of capacity constraints. For the reasons laid out below it is unlikely that
        conglomerate effects arise in relation to the markets for production and supply of
        POS terminals and acquiring processing services.
(383) First, on the market for production and supply of POS terminals, the Parties have a
        combined market share of [40-50]% in the EEA but, for the reasons explained above
        in Section 4.6.1.1, the merged entity likely does not have a significant degree of
        market power in the market for the manufacture and supply of POS terminals. For
        acquiring processing, the Parties only have a modest combined market share of [10-
        20]% in the EEA and, for the reasons set out in Section 4.6.1.3, the merged entity
        does not have a significant degree of market power in the market for acquiring
        processing.
(384) Second, the market investigation confirmed the argument of the Parties that the large
        majority of customers procure POS terminals and acquiring processing services
        separately, using different tenders or different contracts.346 Moreover, a significant
        number of customers procure acquiring processing services for POS transactions and
        POS terminals from different suppliers.347
(385) Therefore, considering that customers can and actually do procure POS terminals and
        acquiring processing services separately, the presence of alternative credible
        suppliers and the lack of a significant degree of market power in both markets for the
        reasons explained in Sections 4.6.1.1 and 4.6.1.3, conglomerate effects are unlikely.
(386) Based on the above, the Commission considers that the Transaction does not raise
        serious doubts as to its compatibility with the internal market in relation to potential
346 Responses to question 102 of Questionnaire Q2 to PSPs.
347 Responses to question 101 of Questionnaire Q2 to PSPs.
                                                      86
 ---pagebreak---         conglomerate effects in relation to the markets for acquiring processing services and
        the supply of POS terminals in the EEA.
4.7.    Summary of competitive concerns caused by the Transaction
(387) As described in the previous Sections, the Commission raises serious doubts for the
        following markets, in each case due to the horizontal non-coordinated effects of the
        Transaction:
        (a)      the market for POS merchant acquiring in Austria, including its potential
                 segmentations by card brand and the segment for debit cards;348
        (b)      the market for POS merchant acquiring in Belgium, including its potential
                 segmentations by card brand and credit/debit card;349
        (c)      the market for POS merchant acquiring in Luxembourg, including its
                 potential segmentations by card brand and by debit/credit cards;
        (d)      the market for the provision and management of POS terminals in
                 Austria; and
        (e)      the market for the provision and management of POS terminals in
                 Belgium.
5.      PROPOSED REMEDIES
5.1.    Framework for the assessment of the commitments
(388) Where a concentration raises serious doubts as regards its compatibility with the
        internal market, the merging parties may undertake to modify the concentration to
        remove the grounds for the serious doubts identified by the Commission. Pursuant to
        Article 6(2) of the Merger Regulation, where the Commission finds that, following
        modification by the undertakings concerned, a notified concentration no longer raises
        serious doubts, it shall declare the concentration compatible with the internal market
        pursuant to Article 6(1)(b) of the Merger Regulation.
(389) As set out in the Commission Notice on remedies acceptable under Council
        Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004
        (the “Remedies Notice”)350, the commitments have to eliminate the competition
        concerns entirely, and have to be comprehensive and effective from all points of
        view.351
(390) In assessing whether commitments will maintain effective competition, the
        Commission considers all relevant factors, including the type, scale and scope of the
348 Whether competitive concerns arise for the credit card segment of the Austrian POS merchant acquiring
    market can be left open as such concerns are ultimately remedied (See Section 5).
349 Whether competitive concerns arise for the international and domestic card network scheme segments of
    the Belgian POS merchant acquiring market can be left open as such concerns are ultimately remedied
    (See Section 5).
350 OJ C 267, 22.10.2008, p. 1.
351 Paragraph 9 of the Remedies Notice.
                                                       87
 ---pagebreak---         proposed commitments, with reference to the structure and particular characteristics
        of the market in which the transaction is likely to significantly impede effective
        competition, including the position of the parties and other participants on the
        market.352
(391) In order for the commitments to comply with those principles, they must be capable
        of being implemented effectively within a short period of time. Concerning the form
        of acceptable commitments, the Merger Regulation gives discretion to the
        Commission as long as the commitments meet the requisite standard. Structural
        commitments will meet the conditions set out above only in so far as the Commission
        is able to conclude with the requisite degree of certainty, at the time of its decision,
        that it will be possible to implement them, and that it will be likely that the new
        commercial structures resulting from them will be sufficiently workable and lasting
        to ensure that serious doubts are removed.353 Divestiture commitments are normally
        the best way to eliminate competition concerns resulting from horizontal overlaps.
5.2.    Proposed commitments
(392) On 9 September 2020, the Notifying Party submitted a set of commitments under
        Article 6(2) of the Merger Regulation (the “First Commitments”), in order to render
        the concentration compatible with the internal market.
(393) The Commission market tested the First Commitments to assess whether they are
        sufficient and suitable to remove the serious doubts identified in Section 4 of this
        decision. The feedback received from merchants and PSPs during the market test
        confirmed that the First Commitments could in principle remedy the serious doubts
        identified by the Commission, but subject to modifications to address a number of
        specific issues described below in Section 5.2.2 of this decision. On 24 September
        2020, the Parties submitted revised Commitments under Article 6(2) of the Merger
        Regulation (the “Final Commitments”) that aim to address the issues identified by
        the Commission.
5.2.1. Description of the First Commitments
(394) In order to render the Transaction compatible with the internal market, the Notifying
        Party submitted commitments consisting of the divestiture to a suitable purchaser
        (the “Purchaser”) of: (i) Ingenico’s POS merchant acquiring and POS provision and
        management business in Austria (the “Austria Divestment Business”), (ii)
        Ingenico’s POS merchant acquiring and POS provision and management business in
        Belgium (the “Belgium Divestment Business”), and (iii) Worldline’s merchant
        acquiring business in Luxembourg (the “Luxembourg Divestment Business”).
        Together, they are referred to as the “Divestment Businesses”.
352 Paragraph 12 of the Remedies Notice.
353 Paragraph 10 of the Remedies Notice.
                                                88
 ---pagebreak--- 5.2.1.1. Scope of the Divestment Businesses
(395) The Divestment Businesses will contain the following assets:
        (a)      Austria Divestment Business: all commercial assets and staff that contribute
                 to the current operation or are necessary to ensure the viability and
                 competitiveness of the Austria Divestment Business:
                 –         all customer contracts, relating to the markets for POS merchant
                           acquiring services and POS installed base, entered into between
                           Ingenico and merchants having their registered office in Austria and
                           operating a business (sales of goods and/or services) in Austria354 and
                           the corresponding customer data and records. In total, approximately
                           [10 000-11 000] clients are included;
                 –         the relevant management, sales and customer support team associated
                           to the Austria Divestment Business, i.e. [...] employees;
        (b)      Belgium Divestment Business: all commercial assets and staff that contribute
                 to the current operation or are necessary to ensure the viability and
                 competitiveness of the Belgium Divestment Business:
                 –         all customer contracts, relating to the markets for POS merchant
                           acquiring services and POS installed base, entered into between
                           Ingenico and merchants having their registered office in Belgium and
                           operating a business (sales of goods and/or services) in Belgium 355 and
                           the corresponding customer data and records. In total, approximately
                           [15 000-20 000] clients are included;
                 –         the relevant management, sales and customer support team associated
                           to the Belgium Divestment Business, i.e. [...] employees; and
        (c)      Luxembourg Divestment Business: all commercial assets that contribute to
                 the current operation or are necessary to ensure the viability and
                 competitiveness of the Luxembourg Divestment Business, which relates to (i)
                 all customer contracts with local merchants (SMBs) relating to the market for
                 POS merchant acquiring services, entered into between these merchants
                 having their registered office in Luxembourg and operating a business (sales
                 of goods and/or services) in Luxembourg and Worldline, before the
                 acquisition of Six Payment Services which was closed in November 2018 and
                 that are using the C-TAP protocol as a technical solution;356 and (ii) [0-10]
                 Worldline local key account merchants, and the corresponding customer data
                 and records. In total, approximately [1 000-2 000] clients are included.
354 Except cross-border merchants which have achieved in 2019 a Merchant Sales Value below 50% in
    Austria, and a few public entities.
355 Except cross-border clients which have achieved in 2019 a Merchant Sales Value below 50% in Belgium
    and a few public entities.
356 Except a few public entities.
                                                      89
 ---pagebreak--- 5.2.1.2. Purchaser requirements of the First Commitments
(396) Under the First Commitments, each of the Divestment Businesses may be sold
        separately to different Purchasers or to one and the same Purchaser. The choice of
        Purchaser(s) is subject to an approval by the Commission. In particular, the
        Purchaser(s) must fulfil the following criteria (together, the “Purchaser
        Requirements”):
        (a)     The Purchaser(s) shall be independent of and unconnected to the Notifying
                Party357 and its Affiliated Undertakings (this being assessed having regard to
                the situation following the divestiture);
        (b)     The Purchaser(s) shall have the financial resources, proven expertise and
                incentive to maintain and develop the Divestment Business(es) as a viable and
                active competitive force in competition with the Parties and other
                competitors; in particular, the Purchaser(s) should have the necessary back-
                office resources for all Divestment Businesses and the POS management
                expertise for the Divestment Businesses in Austria and in Belgium;
        (c)     The acquisition of the Divestment Business(es) by the Purchaser(s) must
                neither be likely to create, in light of the information available to the
                Commission, prima facie competition concerns nor give rise to a risk that the
                implementation of the Commitments will be delayed. In particular, the
                Purchaser(s) must reasonably be expected to obtain all necessary approvals
                from the relevant regulatory authorities for the acquisition of the Divestment
                Business(es); and
        (d)     Specifically for the Luxembourg Divestment Business, the Purchaser(s)
                should have the required personnel to operate it.
5.2.1.3. Other elements of the First Commitments
(397) To reinforce the structural effect of the First Commitments, the Parties commit that if
        less than [...] of the Divestment Businesses would be transferred to the relevant
        Purchaser(s) due to the refusal by certain merchants to agree to the transfer, the
        Parties shall substitute the non-transferred merchants with alternative, comparable
        (by merchant sales value) merchants. Where more than [...] of the Divestment
        Businesses would be transferred, the Parties commit to terminate, in compliance with
        legal requirements and the contractual terms, Ingenico’s (in Belgium and Austria)
        and Worldline’s (in Luxembourg) current merchant acquiring contracts for those
        customers who are in scope of the Divestment Business but would not transfer. The
        Parties shall also not reacquire influence over the Divestment Businesses or contract
        in Austria, Belgium or Luxembourg for merchant acquiring or POS provision and
        management services with customers that are part of the Divestment Businesses for a
        period of 5 years as from Closing.
(398) Furthermore, with the aim of ensuring a smooth transfer of the Divestment
        Businesses, the Notifying Party committed to provide an interim support arrangement
        to the Purchaser during the integration process (the “Interim Support
357 For the avoidance of doubt, this requirement was updated to refer to the “Parties” in the Final
    Commitments.
                                                 90
 ---pagebreak---         Arrangement”). The Interim Support Arrangement consists of the supply, at cost
        and at the Purchaser’s option, for a period of up to 24 months of:
        (a)     Operations and product management, namely transaction processing,
                customer and acquirer servicing, and technical product management;
        (b)     The benefit of Ingenico’s (in Belgium and Austria) and Worldline’s (in
                Luxembourg) scheme licenses and payment institution licenses for the
                operation of the Divestment Businesses; and
        (c)     Other functions that might be reasonably necessary to facilitate the transition,
                such as an interim licence to use relevant trademarks.
(399) The First Commitments also provide that the Notifying Party should enter into
        related commitments, inter alia regarding the separation of the Divestment
        Businesses from its retained businesses, the preservation of the viability,
        marketability and competitiveness of the Divestment Businesses, including the
        appointment of a monitoring trustee and, if necessary, a divestiture trustee.
5.2.1.4. Notifying Party’s views
(400) The Notifying Party argues that the First Commitments would eliminate the
        Commission’s serious doubts in relation to the Transaction. In particular, the
        Notifying Party is of the view that:
        (a)     The First Commitments would address the Commission’s concerns as they: (i)
                remove the large majority of the overlap between the Parties for POS
                merchant acquiring and POS provision and management in Austria, (ii)
                remove the large majority of the overlap between the Parties for POS
                merchant acquiring and POS provision and management in Belgium, and (iii)
                remove more than the overlap between the Parties for POS merchant
                acquiring in Luxembourg;
        (b)     The Divestment Businesses are comprehensive and effective, allowing the
                Purchaser(s) to compete effectively in the relevant markets on a lasting basis;
                and
        (c)     The other elements of the First Commitments ensure that the Commitments
                are capable of being implemented effectively within a short period of time.
5.2.2. Assessment of the First Commitments
(401) The Commission conducted a market test of the Initial Commitments to investigate
        the scope and effectiveness of the Commitments, the viability and competitiveness of
        the Divestment Businesses, and the appropriateness of the Purchaser Requirements.
        The Commission’s assessment of each of these elements in light of the results of the
        market test is as follows.
5.2.2.1. Sufficiency to address concerns and scope
(402) As explained in Section 4 above, the Commission finds that the Transaction gives
        rise to serious doubts as to the compatibility of the concentration with the internal
        market in respect of each of: (i) POS merchant acquiring and POS provision and
                                                 91
 ---pagebreak---          management in Austria; (ii) POS merchant acquiring and POS provision and
         management in Belgium; and (iii) POS merchant acquiring in Luxembourg.
(403) In each of Austria, Belgium and Luxembourg, the First Commitments entail the
         divestment of (at least) the large majority of the overlap in the markets in which
         serious doubts result from the Transaction. The First Commitments would therefore
         ensure that in each of these markets the Transaction maintains effective competition
         at the level in effect pre-Transaction. More specifically:
         (a)      The Austria Divestment Business includes a client base of approximately [10
                  000-11 000] merchant acquiring customers, generating a merchant sales value
                  of approximately EUR [...] in 2019. This represents a market share of
                  approximately [5-10]%, meaning that the First Commitments would remove
                  the large majority of the overlap between the Parties ([5-10]%)358 in the POS
                  merchant acquiring market in Austria. Likewise, virtually the whole of the
                  overlap in Austria is divested in the POS provision and management market,
                  as the Austria Divestment Business includes a POS installed base of
                  approximately [10 000-15 000] POS terminals, representing a market share
                  of [5-10]% (compared with an overlap of [5-10]%).359
         (b)      The Belgium Divestment Business includes a client base of approximately [15
                  000-20 000] merchant acquiring clients, generating a merchant sales value of
                  approximately EUR [...] in 2019. This represents a market share of
                  approximately [0-5]%, meaning that the First Commitments would remove
                  virtually the whole of the overlap between the Parties ([0-5]%) in the POS
                  merchant acquiring market in Belgium. Similarly, virtually the whole of
                  overlap in Belgium is divested in the POS provision and management market,
                  as the Belgium Divestment Business includes a POS installed base of
                  approximately [20 000-25 000] POS terminals, representing a market share of
                  [5-10]% (compared with an overlap of [5-10]%).360
         (c)      The Luxembourg Divestment Business includes a client base of
                  approximately [1 000-2 000] merchant acquiring clients, generating a
                  merchant sales value of approximately EUR [...] in 2019. This represents a
                  market share of approximately [5-10]%, meaning that the First Commitments
                  would divest more than the overlap between the Parties ([5-10]%) in the POS
                  merchant acquiring market in Luxembourg.361
(404) The market test confirmed the suitability of the First Commitments to address the
         Commission’s serious doubts. The vast majority of customers and competitors that
         expressed a view considered that the First Commitments are suitable to effectively
         remove the competitive concerns relating to the markets for POS merchant acquiring
358 The Divestment Business is slightly smaller than the total size of the increment as the merged entity will
    retain those merchants generating more than 50% of their merchant sales value outside of Austria and a
    few public entities.
359 Form RM, paragraphs 21-29.
360 Form RM, paragraphs 5-12.
361 Form RM, paragraphs 13-20.
                                                      92
 ---pagebreak---         in Austria, Belgium and Luxembourg and POS provision and management services
        in Austria and Belgium.362
(405) The market test also confirmed that the Austria Divestment Business and Belgium
        Divestment Business contain sufficient customers, personnel and support services to
        ensure that it will be an effective competitor in the hands of a suitable Purchaser.363
        One respondent in each of Austria and Belgium noted that the Austria Divestment
        Business and Belgium Divestment Business, respectively, exclude those merchant
        acquiring clients that generate the majority of merchant sales value outside of those
        countries, and explained that this could risk excluding key accounts and so may
        reduce the competitiveness of the Divestment Businesses.364 However, the
        overwhelming majority of respondents did not have such concerns and considered
        the scope of the Divestment Businesses to be sufficient. In each case, the divestment
        accounts for the large majority of the overlap and includes customers whose
        commercial focus is on Austria or Belgium respectively (in the sense that more than
        50% of their merchant sales value is generated in the country), including key
        accounts. Therefore, the Commission considers this concern does not call into
        question the competitiveness or scope of the Divestment Business or the efficacy of
        the First Commitments in resolving the concerns.
(406) In relation to Luxembourg, respondents to the market test considered that sufficient
        customers and support services are included. Respondents noted that the transfer of
        personnel would not be strictly necessary to allow a suitable purchaser to compete
        effectively on the relevant Luxembourgish markets.365 However, this point should be
        viewed in the context of the market test results relating to viability, as described
        below.
(407) The results of market test did not identify any other material assets that would be
        necessary for the effectiveness of the divestment but that have not been included in
        the First Commitments.
(408) In light of the above, the Commission considers that the First Commitments are
        adequate in scope and suitable to address the serious doubts the Transaction would
        otherwise give rise to, as the Divestment Businesses will each be an effective
        competitor in the hands of a suitable Purchaser.
5.2.2.2. Viability and competitiveness of the Divestment Businesses
(409) The Austria Divestment Business and Belgium Divestment Business each represent
        (at least) the large majority of Ingenico’s current activities in Belgium regarding POS
        merchant acquiring and POS provision and management. Likewise, the Luxembourg
        Divestment Business is larger than the increment and reflects the size of Worldline’s
362 Responses to questions 3, 5 and 7 of Questionnaire R1 to Merchants and PSPs.
363 Responses to questions 4 and 6 of Questionnaire R1 to Merchants and PSPs. For completeness, some
    respondents considered that the Belgium Divestment Business may be over-staffed and so the Purchaser
    should have the option of whether these personnel should transfer as part of the Belgium Divestment
    Business. The Commission understands that it was the Notifying Party’s intention in the First
    Commitments that personnel should be at the Purchaser(s)’ option for the Belgium Divestment Business
    and Luxembourg Divestment Business; this has been clarified in the Final Commitments.
364 Responses to questions 3 and 6 of Questionnaire R1 to Merchants and PSPs.
365 Responses to question 8 of Questionnaire R1 to Merchants and PSPs.
                                                       93
 ---pagebreak---         POS merchant acquiring business in Luxembourg prior to its acquisition of Six
        Payment Services. In 2019, the Divestment Businesses generated net revenues of
        EUR [...] million in Austria, EUR [...] million in Belgium and EUR [...] million in
        Luxembourg, with a strong level of profitability (gross margins of EUR [...] million,
        EUR [...] million, and EUR [...] million, respectively).
(410) The market test clearly confirmed that the Austria Divestment Business and Belgium
        Divestment Business are viable as individual businesses.366 However, in relation to
        all three Divestment Businesses, a number of customers and competitors pointed to
        the growing importance of a supplier’s ability to provide omnichannel merchant
        acquiring solutions (including both POS merchant acquiring and e-commerce
        merchant acquiring solutions), which was also reflected in the market
        investigation.367 Accordingly, it was suggested that to ensure the competitiveness of
        the Divestment Businesses, they should be capable of offering e-commerce merchant
        acquiring solutions as well as POS merchant acquiring solutions. This would be the
        case if the Purchaser(s) were capable of offering e-commerce merchant acquiring
        solutions in the relevant Member State(s).
(411) However, the market test indicated concerns regarding the viability of the
        Luxembourg Divestment Business, in particular due to the small size of the
        Luxembourg Divestment Business and the relevant markets in Luxembourg.368 The
        Commission considers in light of the feedback of the market test that the
        Luxembourg Divestment would, nevertheless, be viable and competitive if sold in a
        context where it can benefit from the Purchaser’s scale in an adjacent country. This
        could be the case if it were sold together with the Belgium Divestment Business or if
        the Purchaser has a significant presence in an adjacent Member State.
(412) Most respondents confirmed that the Interim Support Arrangements proposed under
        the First Commitments are adequate in scope and duration to enable the Purchaser(s)
        to start operating the Divestment Business successfully.369 The vast majority of
        respondents did not identify any additional support services that are necessary to
        include within the Interim Support Arrangements to ensure a smooth transfer of the
        Divestment Businesses to the Purchaser(s).370
(413) In light of the above, the Commission considers that the First Commitments are
        adequate to ensure the viability of both the Austria Divestment Business and the
        Belgium Divestment Business if they are acquired by suitable Purchaser(s). All three
        Divestment Businesses are competitive, provided that the Purchaser(s) are able to
        provide e-commerce merchant acquiring solutions post-divestment. However, in light
        of the feedback of the market test, the Luxembourg Divestment Business is not viable
        and competitive on a standalone basis.
366 Responses to questions 10.1-10.2 of Questionnaire R1 to Merchants and PSPs.
367 Responses to questions 5.1, 6.1, 14.1, 15.3.1, 19.1, 20 of Questionnaire R1 to Merchants and PSPs;
    responses to question 11 of Questionnaire Q1 to Merchants; responses to questions 11.1, 35 and 38 of
    Questionnaire Q2 to PSPs.
368 Responses to questions 10.3, 10.3.1 and 9 of Questionnaire R1 to Merchants and PSPs.
369 Responses to question 11 of Questionnaire R1 to Merchants and PSPs.
370 Responses to question 11.1 of Questionnaire R1 to Merchants and PSPs.
                                                       94
 ---pagebreak--- 5.2.2.3. Purchaser Requirements, marketability and potential purchasers
(414) The majority of respondents to the market test confirmed that the Purchaser
        Requirements in the First Commitments are appropriate to identify a suitable
        Purchaser.371
(415) As regards the need for further Purchaser Requirements, respondents generally did
        not consider it necessary for a suitable Purchaser to already be active in the Member
        State of the Divestment Business. Rather, respondents generally considered that it
        was sufficient for a Purchaser to be active as a merchant acquirer in the EEA,
        pointing to the fact that the necessary licences to operate are valid in all Member
        States as result of the EEA-wide “passporting” regime.372
(416) Otherwise, the overall results of the market test did not indicate that any additional
        Purchaser Requirements would be appropriate. While it was considered advantageous
        for a Purchaser to already hold relevant scheme licences (e.g. Visa, Mastercard, local
        schemes such as Bancontact), the market test confirmed that a Purchaser is
        reasonably expected to be able to procure any necessary scheme licences within the
        duration of the Interim Support Agreement.373
(417) The vast majority of respondents indicated that they consider the Divestment
        Businesses to be attractive to a Purchaser(s).374 Indeed, several respondents expressed
        preliminary interest in acquiring each of the Divestment Businesses, with some
        Purchasers interested in acquiring more than one of them.375
(418) In light of the above, the Commission considers that the Divestment Businesses are
        perceived as marketable and attractive businesses. However, to ensure the suitability
        of the Purchaser(s), the Purchaser Requirements should be amended to require that
        the Purchaser(s) have the necessary licences to operate as a merchant acquirer in the
        relevant Member States, or have these licences within the EEA and be able to benefit
        from the “passporting” regime.
5.2.3. Description of the Final Commitments
(419) In response to the Commission's feedback regarding the outcome of the market test
        and its preliminary assessment, the Parties submitted the Final Commitments on 24
        September 2020. The Final Commitments represent an amended version of the First
        Commitments, with the following changes.376
(420) First, three additional Purchaser Requirements have been introduced, namely that:
        (a)      the Purchaser(s) must “have the required licences or shall extend an existing
                 EU licence for operating in Belgium and/or Austria and/or Luxembourg”;
371 Responses to question 14 of Questionnaire R1 to Merchants and PSPs.
372 Responses to question 15 of Questionnaire R1 to Merchants and PSPs; see Article 11(9) of the Payments
    Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on
    Payment Services in the Internal Market.
373 Responses to questions 16 and 18 of Questionnaire R1 to Merchants and PSPs.
374 Responses to question 12 of Questionnaire R1 to Merchants and PSPs.
375 Responses to question 13 of Questionnaire R1 to Merchants and PSPs.
376 The Final Commitments also included certain clarificatory modifications that were not of major
    significance and so are not discussed in this decision.
                                                         95
 ---pagebreak---        (b)     the Purchaser(s) must “be capable of offering e-commerce merchant
               acquiring services to the transferred merchants, or be able to do so in the
               near future, in Belgium and/or Austria and/or Luxembourg, as relevant”; and
       (c)     the Purchaser of the Luxembourg Divestment Business must “already operate
               in a neighbouring geographic merchant acquiring market, e.g. in the Benelux
               region, Germany or France, with a sufficient presence to operate the
               Luxembourg Divestment Business in a viable and competitive manner”.
(421) Second, it was clarified that the Personnel shall be included within the scope of the
       Austria Divestment Business and Belgium Divestment Business only at the option of
       the Purchaser(s).
(422) All of these changes have been incorporated into and form an integral part of the
       Final Commitments annexed to this decision.
5.2.4. Assessment and conclusion on the Final Commitments
(423) The amendments introduced by the Parties into the Final Commitments resolve all of
       the concerns that the Commission had regarding the First Commitments.
       Accordingly, based on the information available to it, the Commission is satisfied
       that the Final Commitments are feasible, viable, competitive and marketable.
(424) Moreover, for the reasons outlined above, and in view of the results of the market
       test, the Commission concludes that the Final Commitments entered into by the
       undertakings concerned and as submitted to the Commission on 24 September 2020
       are sufficient to eliminate the serious doubts as to the compatibility of the
       concentration with the internal market in respect of each of: (i) POS merchant
       acquiring and POS provision and management in Austria, (ii) POS merchant
       acquiring and POS provision and management in Belgium, and (iii) POS merchant
       acquiring in Luxembourg.
5.3.   Conclusion on remedies
(425) Under the first sentence of the second subparagraph of Article 6(2) of the Merger
       Regulation, the Commission may attach to its decision conditions and obligations
       intended to ensure that the undertakings concerned comply with the commitments
       they have entered into vis-à-vis the Commission with a view to rendering a notified
       concentration compatible with the internal market.
(426) The achievement of the measure that gives rise to the structural change of the market
       is a condition, whereas the implementing steps which are necessary to achieve this
       result are generally obligations on the Parties. Where a condition is not fulfilled, the
       Commission’s decision declaring the concentration compatible with the internal
       market no longer stands. Where the undertakings concerned commit a breach of an
       obligation, the Commission may revoke the clearance decision in accordance with
       Article 8(6) of the Merger Regulation. The undertakings concerned may also be
       subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the
       Merger Regulation.
(427) In accordance with the distinction described in the previous paragraph, the decision
       in this case is conditioned on the full compliance with the requirements set out in
                                               96
 ---pagebreak---       Section B of the Final Commitments (including the Schedule), which constitute
      conditions. The remaining requirements set out in the other Sections of the Final
      Commitments constitute obligations, as they concern the implementing steps that are
      necessary to achieve the modifications sought in a manner compatible with the
      internal market.
(428) The full text of the Final Commitments is annexed to this decision and forms an
      integral part thereof.
6.    CONCLUSION
(429) For the above reasons, the Commission has decided not to oppose the proposed
      concentration as modified by the Final Commitments and to declare it compatible
      with the internal market and with the functioning of the EEA Agreement, subject to
      full compliance with the conditions in Section B (including the Schedule) of the Final
      Commitments annexed to the present decision and with the obligations contained in
      the other sections of the said Final Commitments. This decision is adopted in
      application of Article 6(1)(b) in conjunction with Article 6(2) of the Merger
      Regulation and Article 57 of the EEA Agreement.
                                                    For the Commission
                                                    (Signed)
                                                    Margrethe VESTAGER
                                                    Executive Vice-President
                                              97
 ---pagebreak---                         Case M.9776 – Worldline / Ingenico
      COMMITMENTS TO THE EUROPEAN COMMISSION
 Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 (the “Merger
 Regulation”), Worldline S.A. (the “Notifying Party” or “Worldline”) hereby enters into
 the following Commitments (the “Commitments”) vis-à-vis the European Commission
 (the “Commission”) with a view to rendering the acquisition of sole control of the whole
 Ingenico Group S.A. (“Ingenico”) (Ingenico and Worldline are referred to as the
 “Parties”, or post-transaction, the “Combined Entity”) (the “Concentration”) compatible
 with the internal market and the functioning of the EEA Agreement.
 The Commitments shall take effect upon the date of adoption of the Decision.
 This text shall be interpreted in light of the Commission’s decision pursuant to Article
 6(1)(b) of the Merger Regulation to declare the Concentration compatible with the
 internal market and the functioning of the EEA Agreement (the “Decision”), in the
 general framework of European Union law, in particular in light of the Merger
 Regulation, and by reference to the Commission Notice on remedies acceptable under
 Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No
 802/2004 (the “Remedies Notice”).
1.     SECTION A.        DEFINITIONS
 1. For the purpose of the Commitments, the following terms shall have the following
     meaning:
 Affiliated Undertakings: undertakings controlled by the Parties and/or by the ultimate
 parents of the Parties, whereby the notion of control shall be interpreted pursuant to
 Article 3 of the Merger Regulation and in light of the Commission Consolidated
 Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of
 concentrations between undertakings (the "Consolidated Jurisdictional Notice").
 Assets: the assets that contribute to the current operation or are necessary to ensure the
 viability and competitiveness of the Divestment Businesses as indicated in Section B,
 paragraph 8 (a), (b) and (c) and described more in detail in the Schedule.
 Closing: the transfer of the legal title to the Divestment Businesses to the Purchaser.
 Closing Date: the closing of the proposed transaction filed under case M.9776.
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                       24 September 2020
 Closing Period: the period of 6 months from the approval of the Purchaser and the terms
 of sale by the Commission.
 Combined Entity: Worldline and Ingenico post-transaction
 Confidential Information: any business secrets, know-how, commercial information, or
 any other information of a proprietary nature that is not in the public domain.
 Conflict of Interest: any conflict of interest that impairs the Trustee's objectivity and
 independence in discharging its duties under the Commitments.
 Divestment Business(es): Part of Ingenico’s (in Belgium and Austria) and Worldline's
 (in Luxembourg) client portfolio, key assets and key personnel as defined and detailed in
 the Schedule which the Combined Entity commits to divest (respectively the Belgian
 Divestment Business, the Luxembourg Divestment Business and the Austrian Divestment
 Business).
 Divestiture Trustee: one or more natural or legal person(s) who is/are approved by the
 Commission and appointed by Worldline and who has/have received from Worldline the
 exclusive Trustee Mandate to sell the Divestment Businesses to one or several
 Purchaser(s) at no minimum price at the expiry of the first Divestiture Period.
 Effective Date: the date of adoption of the Decision.
 First Divestiture Period: the period of […] from the Effective Date, as may be extended
 in the conditions set out in paragraph 45 of the present Commitments Letter.
 Hold Separate Manager: the person appointed by Worldline for the Divestment
 Businesses to manage the day-to-day business under the supervision of the Monitoring
 Trustee.
                                                  2
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                       24 September 2020
 Ingenico: Ingenico is a société anonyme à conseil d’administration incorporated under
 the laws of France and listed on Euronext Paris with a market capitalization of approx.
 EUR 6,7 billion as at January 31st, 2020. Ingenico has its official seat in Paris, France,
 and its registered office at 28/32 Boulevard de Grenelle, (75015) Paris, registered with the
 French Trade Register of the Chamber of Commerce under number 317 218 758 (Paris).
 Ingenico here refers to Ingenico Group S.A. and all controlled subsidiaries.
 Key Personnel: all personnel necessary to maintain the viability and competitiveness of
 the Divestment Businesses, as listed in the Schedule, including the Hold Separate
 Manager.
 Monitoring Trustee: one or more natural or legal person(s) who is/are approved by the
 Commission and appointed by Worldline, and who has/have the duty to monitor
 Worldline’s and Ingenico’s compliance with the conditions and obligations attached to
 the Decision.
 Parties: the Notifying Party and the target of the concentration.
 Personnel: all staff currently employed by the Divestment Businesses, including staff
 seconded to the Divestment Businesses, shared personnel as well as the additional
 personnel listed in the Schedule.
 Purchaser(s): the entity(ies) approved by the Commission as acquirer(s) of all or part of
 the Divestment Businesses in accordance with the criteria set out in Section D.
 Purchaser Criteria: the criteria laid down in paragraph 18 of these Commitments that
 the Purchaser must fulfil in order to be approved by the Commission.
 Schedule: the schedule to these Commitments describing more in detail the Divestment
 Businesses.
 Trustee(s): the Monitoring Trustee and/or the Divestiture Trustee as the case may be.
 Trustee Divestiture Period: the period of six months from the end of the First Divestiture
 Period.
                                                  3
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                      24 September 2020
 Worldline: Worldline is a société anonyme à conseil d’administration incorporated under
 the laws of France and listed on Euronext Paris with a market capitalization of
 approximately EUR 11,6 billion as at January 31st, 2020. Worldline has its official seat in
 Bezons, France, and its registered office at 80 quai Voltaire, (95870) Bezons, registered
 with the French Trade Register of the Chamber of Commerce under number 378 901 946
 (Pontoise).
2.     SECTION B.      THE COMMITMENT TO DIVEST AND THE DIVESTMENT BUSINESSES
       Commitment to divest
 2. In order to maintain effective competition, Worldline commits to divest, or procures
    the divestiture of the Divestment Businesses by the end of the Trustee Divestiture
    Period as a going concern to a one or more purchaser(s) and on terms of sale approved
    by the Commission in accordance with the procedure described in paragraph 19 of
    these Commitments. To carry out the divestiture, Worldline commits to find one or
    several purchaser(s) and to enter into (a) final binding sale and purchase agreement(s)
    for the sale of the Divestment Businesses within the First Divestiture Period. If
    Worldline has not entered into such an agreement at the end of the First Divestiture
    Period, Worldline shall grant the Divestiture Trustee an exclusive mandate to sell the
    Divestment Businesses in accordance with the procedure described in paragraph 32 in
    the Trustee Divestiture Period.
 3. Worldline shall be deemed to have complied with this commitment if:
       (a)      by the end of the Trustee Divestiture Period, Worldline or the Divestiture
                Trustee has entered into a final binding sale and purchase agreement and
                the Commission approves the proposed purchaser and the terms of sale as
                being consistent with the Commitments in accordance with the procedure
                described in paragraph 19; and
       (b)      the Closing of the sale of the Divestment Businesses to the Purchaser(s)
                takes place within the Closing Period.
 4. In order to reinforce the structural effect of the Commitments, the Combined Entity
    commits:
        i.   in the event where less than [...] of the Divestment Businesses would be
                                                  4
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                       24 September 2020
              transferred to one or more Purchasers by the date of Closing due to a
              merchant’s refusal, to substitute non transferred merchants by alternative
              merchants, at the choice of the Parties, either merchants from Worldline or
              from Ingenico, comparable1 to those included in the Divestment Businesses
              “the Merchant Substitution”;
        ii.   in the event where more than [...] of the Divestment Businesses would be
              transferred to one or more Purchasers, to terminate, in compliance with legal
              requirements and the contractual terms, Ingenico’s (in Belgium and Austria)
              and Worldline’s (in Luxembourg) current acquiring contracts remaining in the
              scope of the Divestment Businesses at the expiry of the Closing Period, if
              any; for the avoidance of doubt, this termination will not concern merchants
              that have been kept by Worldline as a result of the Merchant Substitution
              pursuant to paragraph 4.i of the present Commitments Letter. The Combined
              Entity undertakes to notify this termination in accordance with the contractual
              provisions and will invite the customers to find an alternative merchant
              acquirer.
  5. With regards to customer contracts requiring the customer's consent to be transferred
     to a third party, the Combined Entity will endeavour its best efforts to procure the
     customer’s consent (either the express or tacit consent).
  6. In order to maintain the structural effect of the Commitments, the Notifying Party
     shall, for a period of 5 years after Closing, not acquire, whether directly or indirectly,
     the possibility of exercising influence (as defined in paragraph 43 of the Remedies
     Notice, footnote 3) over the whole or part of the Divestment Businesses, and in
     particular it shall (i) instruct commercial teams not to directly approach and (ii) not
     directly contract and on-board onto its acquiring system the customers of the
     Divestment Businesses, unless, following the submission of a reasoned request from
     the Notifying Party showing good cause and accompanied by a report from the
     Monitoring Trustee (as provided in paragraph 46 of these Commitments), the
     Commission finds that the structure of the market has changed to such an extent that
     the absence of influence over the Divestment Businesses (or absence of contracts with
     its customers) is no longer necessary to render the proposed concentration compatible
     with the internal market.
  7. In addition, the Combined Entity commits to duly inform in writing its indirect sales
     channels partners in Belgium, Luxembourg and Austria (if any) no later than one
     week after the Effective Date that they will not be able to contract merchant acquiring
1   With an equivalent merchant sales value.
                                                   5
 ---pagebreak---    Worldline/Ingenico
   Case No. COMP/M.9776                                                        24 September 2020
        or POS terminal provision and management services (as relevant) with customers that
        are part of the Divestment Businesses for a period of 5 years as from the Closing.
           Structure and definition of the Divestment Businesses
    8. The Divestment Businesses consists of (i) Ingenico’s merchant acquiring business in
        Belgium and Austria and (ii) Worldline’s merchant acquiring business in Luxembourg
        as detailed in the Schedule. The legal and functional structure of the Divestment
        Businesses as operated to date is described in the Schedule. The Divestment
        Businesses, described in more detail in the Schedule, includes all commercial assets in
        all three countries and related staff (except in Luxembourg) at the option of the
        Purchaser that contribute to the current operation or are necessary to ensure the
        viability and competitiveness of the Divestment Businesses.
    9. In addition, the Divestment Businesses include the benefit, for a transitional period of
        up to 24 months after Closing and on terms and conditions equivalent to those at
        present afforded to the Divestment Businesses, set at cost, of all current arrangements
        under which Ingenico, Worldline or their Affiliated Undertakings supply products or
        services to the Divestment Businesses, as detailed in the Schedule, unless otherwise
        agreed with the Purchaser. Strict Chinese wall procedures will be adopted so as to
        ensure that any competitively sensitive information related to, or arising from such
        supply arrangements (for example, product roadmaps) will not be shared with, or
        passed on to, anyone else.
3.   SECTION C.       RELATED COMMITMENTS
           Preservation of viability, marketability and competitiveness
    10. From the Effective Date until Closing, the Notifying Party shall preserve or procure
        the preservation of the economic viability, marketability and competitiveness of the
        Divestment Businesses, in accordance with good business practice, and shall
        minimise as far as possible any risk of loss of competitive potential of the Divestment
        Businesses. In particular the Combined Entity undertakes:
           (a)       not to carry out any action that might have a significant adverse impact on
                     the value, management or competitiveness of the Divestment Businesses
                     or that might alter the nature and scope of activity, or the industrial or
                     commercial strategy or the investment policy of the Divestment
                     Businesses;
                                                       6
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                        24 September 2020
       (b)        to make available, or procure to make available, sufficient resources for
                  the development of the Divestment Businesses, on the basis and
                  continuation of the existing business plans;
       (c)        to take all reasonable steps, or procure that all reasonable steps are being
                  taken, including appropriate incentive schemes (based on industry
                  practice), to encourage all Key Personnel to remain with the Divestment
                  Businesses, and not to solicit or move any Personnel to Worldline’s
                  remaining business. Where, nevertheless, individual members of the Key
                  Personnel exceptionally leave the Divestment Businesses, Worldline shall
                  provide a reasoned proposal to replace the person or persons concerned to
                  the Commission and the Monitoring Trustee. Worldline must be able to
                  demonstrate to the Commission that the replacement is well suited to carry
                  out the functions exercised by those individual members of the Key
                  Personnel. The replacement shall take place under the supervision of the
                  Monitoring Trustee, who shall report to the Commission.
       Hold-separate obligations
 11. The Notifying Party commits, from the Effective Date until Closing, to keep the
     Divestment Businesses separate from the business(es) it is retaining and to ensure that
     unless explicitly permitted under these Commitments: (i) current management and
     staff of the business(es) retained by Worldline or Ingenico have no involvement in the
     Divestment Businesses; (ii) the Key Personnel of the Divestment Businesses has no
     involvement in any business retained by Worldline or Ingenico and do not report to
     any individual outside the Divestment Businesses.
 12. Until Closing, Worldline shall assist the Monitoring Trustee in ensuring that the
     Divestment Businesses are managed as a distinct and saleable entity separate from the
     business(es) which Worldline is retaining. Immediately after the adoption of the
     Decision, Worldline shall appoint a Hold Separate Manager. The Hold Separate
     Manager, who shall be part of the Key Personnel, shall manage the Divestment
     Businesses independently and in the best interest of the business with a view to
     ensuring its continued economic viability, marketability and competitiveness and its
     independence from the businesses retained by Worldline. The Hold Separate Manager
     shall closely cooperate with and report to the Monitoring Trustee and, if applicable,
     the Divestiture Trustee. Any replacement of the Hold Separate Manager shall be
     subject to the procedure laid down in paragraph 10(c) of these Commitments. The
     Commission may, after having heard Worldline, require Worldline to replace the
     Hold Separate Manager.
                                                   7
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                      24 September 2020
        Ring-fencing
 13. Worldline and Ingenico shall implement, or procure to implement, all necessary
     measures to ensure that they do not, after the Effective Date, obtain any Confidential
     Information relating to the Divestment Businesses and that any such Confidential
     Information obtained by Worldline or Ingenico before the Effective Date will be
     eliminated and not be used by either Worldline or Ingenico. In particular, the
     participation of the Divestment Businesses in any central information technology
     network shall be severed to the extent possible, without compromising the viability of
     the Divestment Businesses. Worldline and Ingenico may obtain or keep information
     relating to the Divestment Businesses which is reasonably necessary for the
     divestiture of the Divestment Businesses, or as agreed between Worldline and the
     Purchaser(s) in particular in the context of Transitional Services agreements, or the
     disclosure of which to Worldline or Ingenico is required by law.
        Non-solicitation clause
 14. The Parties undertake, subject to customary limitations, not to solicit, and to procure
     that Affiliated Undertakings do not solicit, the Key Personnel transferred with the
     Divestment Businesses for a period of 2 years after Closing.
        Due diligence
 15. In order to enable potential purchasers to carry out a reasonable due diligence of the
     Divestment Businesses, Worldline and Ingenico shall, subject to customary
     confidentiality assurances and dependent on the stage of the divestiture process:
        (a)      provide to potential purchasers sufficient information as regards the
                 Divestment Businesses;
        (b)      provide to potential purchasers sufficient information relating to the
                 Personnel and allow them reasonable access to the Personnel.
        Reporting
 16. Worldline shall submit written reports in English on potential purchasers of the
     Divestment Businesses and developments in the negotiations with such potential
     purchasers to the Commission and the Monitoring Trustee no later than 10 days after
                                                 8
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                               24 September 2020
      the end of every month following the Effective Date (or otherwise at the
      Commission’s request). Worldline shall submit a list of all potential purchasers
      having expressed interest in acquiring all or part of the Divestment Businesses to the
      Commission at each and every stage of the divestiture process, as well as a copy of all
      the offers made by potential purchasers within five days of their receipt.
  17. Worldline shall inform the Commission and the Monitoring Trustee on the
      preparation of the data room documentation and the due diligence procedure and shall
      submit a copy of any information memorandum to the Commission and the
      Monitoring Trustee before sending the memorandum out to potential purchasers.
4.       SECTION D.        THE PURCHASER
  18. In order to be approved by the Commission, the Purchaser must fulfil the following
      criteria:
        (a) The Purchaser(s) shall be independent of and unconnected to the Parties and
        their Affiliated Undertakings (this being assessed having regard to the situation
        following the divestiture).
        (b) The Purchaser(s) shall have the financial resources, proven expertise and
        incentive to maintain and develop the Divestment Business(es) as a viable and
        active competitive force in competition with the Parties and other competitors; in
        particular, the Purchaser(s) should have the necessary back-office resources for all
        Divestment Businesses and the POS management expertise for the Divestment
        Businesses in Austria and in Belgium.
        (c) The Purchaser(s) shall have the required licenses or shall extend an existing EU
        license2for operating in Belgium, and/or Austria and/or Luxembourg.
        (d) The Purchaser(s) shall be capable of offering e-commerce merchant acquiring
        services to the transferred merchants, or be able to do so in the near future in
        Belgium and/or Austria and/or Luxembourg, as relevant.
        (e) The acquisition of the Divestment Business(es) by the Purchaser(s) must neither
        be likely to create, in light of the information available to the Commission, prima
        facie competition concerns nor give rise to a risk that the implementation of the
        Commitments will be delayed. In particular, the Purchaser(s) must reasonably be
2   Extension of a payment institution license from an EU Member State to another Member State, referred to
    as “passporting”, is a mere formality.
                                                         9
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                     24 September 2020
        expected to obtain all necessary approvals from the relevant regulatory authorities
        for the acquisition of the Divestment Business(es).
        (f) Specifically for the Luxembourg Divestment Business, the Purchaser(s) should
        (i) have the required personnel to operate it and (ii) already operate in a
        neighboring geographic merchant acquiring market, e.g. in the Benelux region,
        Germany or France with a sufficient presence to operate the Luxembourg
        Divestment Business in a viable and competitive manner.
 19. The final binding sale and purchase agreement (as well as ancillary agreements)
     relating to the divestment of the Divestment Business(es) shall be conditional on the
     Commission’s approval. When Worldline has reached an agreement with a purchaser,
     it shall submit a fully documented and reasoned proposal, including a copy of the
     final agreement(s), within one week to the Commission and the Monitoring Trustee.
     Worldline must be able to demonstrate to the Commission that the purchaser fulfils
     the Purchaser Criteria and that the Divestment Business(es) is being sold in a manner
     consistent with the Commission's Decision and the Commitments.
 20. For the approval, the Commission shall verify that the purchaser fulfils the Purchaser
     Criteria and that the Divestment Business(es) is being sold in a manner consistent
     with the Commitments including their objective to bring about a lasting structural
     change in the market. The Commission may approve the sale of the Divestment
     Business(es) without one or more Assets or parts of the Personnel, or by substituting
     one or more Assets or parts of the Personnel with one or more different assets or
     different personnel, if this does not affect the viability and competitiveness of the
     Divestment Business(es) after the sale, taking account of the proposed purchaser.
5.      SECTION E.       TRUSTEE
        I.        Appointment procedure
 21. Worldline shall appoint a Monitoring Trustee to carry out the functions specified in
     these Commitments for a Monitoring Trustee. The Notifying Party commits not to
     close the Concentration before the appointment of a Monitoring Trustee.
 22. If Worldline has not entered into a (or several) binding sale and purchase
     agreement(s) regarding the Divestment Businesses one month before the end of the
     First Divestiture Period or if the Commission has rejected a purchaser proposed by
                                                 10
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                       24 September 2020
     Worldline at that time or thereafter, Worldline shall appoint a Divestiture Trustee. The
     appointment of the Divestiture Trustee shall take effect upon the commencement of
     the Trustee Divestiture Period.
 23. The Trustee shall:
       (i) at the time of appointment, be independent of the Notifying Party and its
       Affiliated Undertakings;
       (ii) possess the necessary qualifications to carry out its mandate, for example have
       sufficient relevant experience as an investment banker or consultant or auditor; and
       (iii) neither have nor become exposed to a Conflict of Interest.
 24. The Trustee shall be remunerated by Worldline in a way that does not impede the
     independent and effective fulfilment of its mandate. In particular, where the
     remuneration package of a Divestiture Trustee includes a success premium linked to
     the final sale value of the Divestment Businesses, such success premium may only be
     earned if the divestiture takes place within the Trustee Divestiture Period.
                   Proposal by Worldline
 25. No later than two weeks after the Effective Date, Worldline shall submit the name or
     names of one or more natural or legal persons whom Worldline proposes to appoint as
     the Monitoring Trustee to the Commission for approval. No later than one month
     before the end of the First Divestiture Period or on request by the Commission,
     Worldline shall submit a list of one or more persons whom Worldline proposes to
     appoint as Divestiture Trustee to the Commission for approval. The proposal shall
     contain sufficient information for the Commission to verify that the person or persons
     proposed as Trustee fulfil the requirements set out in paragraph 23 and shall include:
       (a)        the full terms of the proposed mandate, which shall include all provisions
                  necessary to enable the Trustee to fulfil its duties under these
                  Commitments;
       (b)        the outline of a work plan which describes how the Trustee intends to carry
                  out its assigned tasks;
       (c)        an indication whether the proposed Trustee is to act as both Monitoring
                  Trustee and Divestiture Trustee or whether different trustees are proposed
                                                   11
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Case No. COMP/M.9776                                                       24 September 2020
                  for the two functions.
                   Approval or rejection by the Commission
 26. The Commission shall have the discretion to approve or reject the proposed Trustee(s)
     and to approve the proposed mandate subject to any modifications it deems necessary
     for the Trustee to fulfil its obligations. If only one name is approved, Worldline shall
     appoint or cause to be appointed the person or persons concerned as Trustee, in
     accordance with the mandate approved by the Commission. If more than one name is
     approved, Worldline shall be free to choose the Trustee to be appointed from among
     the names approved. The Trustee shall be appointed within one week of the
     Commission’s approval, in accordance with the mandate approved by the
     Commission.
                   New proposal by Worldline
 27. If all the proposed Trustees are rejected, Worldline shall submit the names of at least
     two more natural or legal persons within one week of being informed of the rejection,
     in accordance with paragraphs 21 and 26 of these Commitments.
                   Trustee nominated by the Commission
 28. If all further proposed Trustees are rejected by the Commission, the Commission shall
     nominate a Trustee, whom Worldline shall appoint, or cause to be appointed, in
     accordance with a trustee mandate approved by the Commission.
        II.        Functions of the Trustee
 29. The Trustee shall assume its specified duties and obligations in order to ensure
     compliance with the Commitments. The Commission may, on its own initiative or at
     the request of the Trustee or Worldline, give any orders or instructions to the Trustee
     in order to ensure compliance with the conditions and obligations attached to the
     Decision.
                                                    12
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Case No. COMP/M.9776                                                       24 September 2020
                 Duties and obligations of the Monitoring Trustee
 30. The Monitoring Trustee shall:
     (i)    propose in its first report to the Commission a detailed work plan describing
            how it intends to monitor compliance with the obligations and conditions
            attached to the Decision.
     (ii)   oversee, in close co-operation with the Hold Separate Manager, the on-going
            management of the Divestment Businesses with a view to ensuring its
            continued economic viability, marketability and competitiveness and monitor
            compliance by Worldline and Ingenico with the conditions and obligations
            attached to the Decision. To that end the Monitoring Trustee shall:
              (a) monitor the preservation of the economic viability, marketability and
                   competitiveness of the Divestment Businesses, and the keeping separate
                   of the Divestment Businesses from the business retained by the Parties,
                   in accordance with paragraphs 10 and 11 of these Commitments;
              (b) supervise the management of the Divestment Businesses as a distinct
                   and saleable entity, in accordance with paragraph 12 of these
                   Commitments;
              (c) with respect to Confidential Information:
                        determine all necessary measures to ensure that Worldline and
                         Ingenico do not after the Effective Date obtain any Confidential
                         Information relating to the Divestment Businesses,
                        in particular strive for the severing of the Divestment Businesses’
                         participation in a central information technology network to the
                         extent possible, without compromising the viability of the
                         Divestment Businesses,
                        make sure that any Confidential Information relating to the
                         Divestment Businesses obtained by Worldline and Ingenico before
                         the Effective Date is eliminated and will not be used by either
                         Worldline or Ingenico, and
                        decide whether such information may be disclosed to or kept by
                         Worldline or Ingenico as the disclosure is reasonably necessary to
                                                   13
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Case No. COMP/M.9776                                                       24 September 2020
                         allow them to carry out the divestiture (in particular in the context
                         of Transitional Services agreements, any information as agreed by
                         Worldline or Ingenico and the Purchaser(s)) or as the disclosure is
                         required by law;
          (d) monitor the splitting of assets and the allocation of Personnel between the
                Divestment Businesses and Worldline, Ingenico or Affiliated Undertakings;
 (iii)  propose to Worldline or Ingenico such measures as the Monitoring Trustee
        considers necessary to ensure their compliance with the conditions and obligations
        attached to the Decision, in particular the maintenance of the full economic
        viability, marketability or competitiveness of the Divestment Businesses, the
        holding separate of the Divestment Businesses and the non- disclosure of
        competitively sensitive information;
 (iv)   review and assess potential purchasers as well as the progress of the divestiture
        process and verify that, dependent on the stage of the divestiture process:
          (a) potential purchasers receive sufficient and correct information relating to
                the Divestment Businesses and the Personnel in particular by reviewing, if
                available, the data room documentation, the information memorandum and
                the due diligence process, and
          (b) potential purchasers are granted reasonable access to the Personnel;
 (v)    act as a contact point for any requests by third parties, in particular potential
        purchasers, in relation to the Commitments;
 (vi)   provide to the Commission, sending Worldline a non-confidential copy at the
        same time, a written report within 15 days after the end of every month that shall
        cover the operation and management of the Divestment Businesses as well as the
        splitting of assets and the allocation of Personnel so that the Commission can
        assess whether the business is held in a manner consistent with the Commitments
        and the progress of the divestiture process as well as potential purchasers;
 (vii)  promptly report in writing to the Commission, sending Worldline a non-
        confidential copy at the same time, if it concludes on reasonable grounds that
        Worldline or Ingenico is failing to comply with these Commitments;
                                                 14
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Case No. COMP/M.9776                                                        24 September 2020
 (viii)   within one week after receipt of the documented proposal referred to in paragraph
          19 of these Commitments, submit to the Commission, sending Worldline a non-
          confidential copy at the same time, a reasoned opinion as to the suitability and
          independence of the proposed purchaser and the viability of the Divestment
          Businesses after the Sale and as to whether the Divestment Businesses is sold in a
          manner consistent with the conditions and obligations attached to the Decision, in
          particular, if relevant, whether the Sale of the Divestment Businesses without one
          or more Assets or not all of the Personnel affects the viability of the Divestment
          Businesses after the sale, taking account of the proposed purchaser;
 (ix)     assume the other functions assigned to the Monitoring Trustee under the
          conditions and obligations attached to the Decision.
 31. If the Monitoring and Divestiture Trustee are not the same legal or natural persons,
      the Monitoring Trustee and the Divestiture Trustee shall cooperate closely with each
      other during and for the purpose of the preparation of the Trustee Divestiture Period
      in order to facilitate each other's tasks.
                   Duties and obligations of the Divestiture Trustee
 32. Within the Trustee Divestiture Period, the Divestiture Trustee shall sell at no
      minimum price the Divestment Business(es) to a purchaser, provided that the
      Commission has approved both the purchaser and the final binding sale and purchase
      agreement (and ancillary agreements) as in line with the Commission's Decision and
      the Commitments in accordance with paragraphs 18 and 19 of these Commitments.
      The Divestiture Trustee shall include in the sale and purchase agreement (as well as in
      any ancillary agreements) such terms and conditions as it considers appropriate for an
      expedient sale in the Trustee Divestiture Period. In particular, the Divestiture Trustee
      may include in the sale and purchase agreement such customary representations and
      warranties and indemnities as are reasonably required to effect the sale. The
      Divestiture Trustee shall protect the legitimate financial interests of Worldline and
      Ingenico, subject to the Notifying Party unconditional obligation to divest at no
      minimum price in the Trustee Divestiture Period.
 33. In the Trustee Divestiture Period (or otherwise at the Commission’s request), the
      Divestiture Trustee shall provide the Commission with a comprehensive monthly
      report written in English on the progress of the divestiture process. Such reports shall
      be submitted within 15 days after the end of every month with a simultaneous copy to
                                                   15
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Case No. COMP/M.9776                                                      24 September 2020
     the Monitoring Trustee and a non-confidential copy to the Notifying Party.
        III.      Duties and obligations of the Parties
 34. Worldline and Ingenico shall provide and shall cause their advisors to provide the
     Trustee with all such co-operation, assistance and information as the Trustee may
     reasonably require to perform its tasks. The Trustee shall have full and complete
     access to any of Worldline’s, Ingenico’s or the Divestment Businesses’ books,
     records, documents, management or other personnel, facilities, sites and technical
     information necessary for fulfilling its duties under the Commitments and Worldline,
     Ingenico and the Divestment Businesses shall provide the Trustee upon request with
     copies of any document. Worldline, Ingenico and the Divestment Businesses shall
     make available to the Trustee one or more offices on their premises and shall be
     available for meetings in order to provide the Trustee with all information necessary
     for the performance of its tasks.
 35. Worldline and Ingenico shall provide the Monitoring Trustee with all managerial and
     administrative support that it may reasonably request on behalf of the management of
     the Divestment Businesses. This shall include all administrative support functions
     relating to the Divestment Businesses which are currently carried out at headquarters
     level. Worldline and Ingenico shall provide and shall cause their advisors to provide
     the Monitoring Trustee, on request, with the information submitted to potential
     purchasers, in particular give the Monitoring Trustee access to the data room
     documentation and all other information granted to potential purchasers in the due
     diligence procedure. Worldline shall inform the Monitoring Trustee on possible
     purchasers, submit lists of potential purchasers at each stage of the selection process,
     including the offers made by potential purchasers at those stages, and keep the
     Monitoring Trustee informed of all developments in the divestiture process.
 36. Worldline shall grant or procure Affiliated Undertakings to grant comprehensive
     powers of attorney, duly executed, to the Divestiture Trustee to effect the sale
     (including ancillary agreements), the Closing and all actions and declarations which
     the Divestiture Trustee considers necessary or appropriate to achieve the sale and the
     Closing, including the appointment of advisors to assist with the sale process. Upon
     request of the Divestiture Trustee, Worldline shall cause the documents required for
     effecting the sale and the Closing to be duly executed.
 37. Worldline shall indemnify the Trustee and its employees and agents (each an
     “Indemnified Party”) and hold each Indemnified Party harmless against, and hereby
                                                  16
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Case No. COMP/M.9776                                                        24 September 2020
     agrees that an Indemnified Party shall have no liability to Worldline for, any liabilities
     arising out of the performance of the Trustee’s duties under the Commitments, except
     to the extent that such liabilities result from the willful default, recklessness, gross
     negligence or bad faith of the Trustee, its employees, agents or advisors.
 38. At the expense of Worldline, the Trustee may appoint advisors (in particular for
     corporate finance or legal advice), subject to Worldline’s approval (this approval not
     to be unreasonably withheld or delayed) if the Trustee considers the appointment of
     such advisors necessary or appropriate for the performance of its duties and
     obligations under the Mandate, provided that any fees and other expenses incurred by
     the Trustee are reasonable. Should Worldline refuse to approve the advisors proposed
     by the Trustee the Commission may approve the appointment of such advisors
     instead, after having heard Worldline. Only the Trustee shall be entitled to issue
     instructions to the advisors. Paragraph 37 of these Commitments shall apply mutatis
     mutandis. In the Trustee Divestiture Period, the Divestiture Trustee may use advisors
     who served Worldline during the Divestiture Period if the Divestiture Trustee
     considers this in the best interest of an expedient sale.
 39. Worldline agrees that the Commission may share Confidential Information
     proprietary to Worldline and Ingenico with the Trustee. The Trustee shall not disclose
     such information and the principles contained in Article 17 (1) and (2) of the Merger
     Regulation apply mutatis mutandis.
 40. The Notifying Party agrees that the contact details of the Monitoring Trustee are
     published on the website of the Commission's Directorate-General for Competition
     and they shall inform interested third parties, in particular any potential purchasers, of
     the identity and the tasks of the Monitoring Trustee.
 41. For a period of 10 years from the Effective Date the Commission may request all
     information from the Parties that is reasonably necessary to monitor the effective
     implementation of these Commitments.
        IV.       Replacement, discharge and reappointment of the Trustee
 42. If the Trustee ceases to perform its functions under the Commitments or for any other
     good cause, including the exposure of the Trustee to a Conflict of Interest:
     (a) the Commission may, after hearing the Trustee and Worldline, require Worldline to
          replace the Trustee; or
     (b) Worldline may, with the prior approval of the Commission, replace the Trustee.
                                                   17
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Case No. COMP/M.9776                                                       24 September 2020
 43. If the Trustee is removed according to paragraph 42 of these Commitments, the
     Trustee may be required to continue in its function until a new Trustee is in place to
     whom the Trustee has effected a full hand over of all relevant information. The new
     Trustee shall be appointed in accordance with the procedure referred to in paragraphs
     21-28 of these Commitments.
 44. Unless removed according to paragraph 42 of these Commitments, the Trustee shall
     cease to act as Trustee only after the Commission has discharged it from its duties
     after all the Commitments with which the Trustee has been entrusted have been
     implemented. However, the Commission may at any time require the reappointment
     of the Monitoring Trustee if it subsequently appears that the relevant remedies might
     not have been fully and properly implemented.
6.      SECTION F.     THE REVIEW CLAUSE
 45. The Commission may extend the time periods foreseen in the Commitments in
     response to a request from Worldline or, in appropriate cases, on its own initiative.
     Where Worldline requests an extension of a time period, it shall submit a reasoned
     request to the Commission no later than one month before the expiry of that period,
     showing good cause. This request shall be accompanied by a report from the
     Monitoring Trustee, who shall, at the same time send a non-confidential copy of the
     report to the Notifying Party. Only in exceptional circumstances shall Worldline be
     entitled to request an extension within the last month of any period.
 46. The Commission may further, in response to a reasoned request from the Notifying
     Party showing good cause waive, modify or substitute, in exceptional circumstances,
     one or more of the undertakings in these Commitments. This request shall be
     accompanied by a report from the Monitoring Trustee, who shall, at the same time
     send a non-confidential copy of the report to the Notifying Party. The request shall
     not have the effect of suspending the application of the undertaking and, in particular,
     of suspending the expiry of any time period in which the undertaking has to be
     complied with.
                                                  18
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Case No. COMP/M.9776                                                    24 September 2020
7.     SECTION G.     ENTRY INTO FORCE
 47. The Commitments shall take effect upon the date of adoption of the Decision.
        duly authorised for and on
        behalf of Worldline
       (Signed)
        On 24 September 2020
       duly authorised for and on behalf of Ingenico
       (Signed)
       On 24 September 2020
                                               19
 ---pagebreak--- Worldline/Ingenico
Case No. COMP/M.9776                                                              24 September 2020
                                            SCHEDULE
    1.       The Divestment Businesses as operated to date have the following legal and
             functional structure:
                     Belgium: The Belgian Divestment Business is operated directly by
                      Ingenico from Belgium and consists in all commercial assets and staff
                      that contribute to the current operation or are necessary to ensure the
                      viability and competitiveness of the Belgian Divestment Business:
                           o all customer contracts, relating to the markets for POS merchant
                               acquiring services and POS installed base, entered into between
                               Ingenico and merchants having their registered office in
                               Belgium and operating a business (sales of goods and /or
                               services) in Belgium (the “Ingenico Belgian Clients
                               Portfolio”1 and the corresponding customer data and records;
                           o at the option of the Purchaser, the relevant management, sales
                               and customer support team associated to the Belgian
                               Divestment Business, i.e. [...] employees.
                     Luxembourg: The Luxembourg Divestment Business is operated
                      directly by Worldline from Luxembourg and consists in all commercial
                      assets that contribute to the current operation or are necessary to ensure
                      the viability and competitiveness of the Luxembourg Divestment
                      Business, which relates to (i) all customer contracts with local
                      merchants (SMBs) relating to the market for POS merchant acquiring
                      services, entered into between these merchants having their registered
                      office in Luxembourg and operating a business (sales of goods and /or
                      services) in Luxembourg and Worldline, before the acquisition of Six
                      Payment Services (“SPS”) which was closed in November 2018 and
                      that are using the C-TAP protocol as a technical solution2 and (ii) [0-
                      10] Worldline local key account merchants (“Worldline Luxembourg
                      Clients Portfolio”); and the corresponding customer data and records.
                     Austria: The Austrian Divestment Business is operated directly by
                      Ingenico (Payone) from Austria and consists in all commercial assets
                      and staff that contribute to the current operation or are necessary to
1  Except cross-border clients which have achieved in 2019 a Merchant Sales Value below 50% in Belgium
   and a few public entities.
2  Except a few public entities.
                                                       20
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Case No. COMP/M.9776                                                         24 September 2020
                    ensure the viability and competitiveness of the Austrian Divestment
                    Business:
                        o all customer contracts, relating to the markets for POS merchant
                             acquiring services and POS installed base, entered into between
                             Ingenico and merchants having their registered office in Austria
                             and operating a business (sales of goods and /or services) in
                             Austria (the “Ingenico Austrian Clients Portfolio”)3 and the
                             corresponding customer data and records;
                        o at the option of the Purchaser, the relevant management, sales
                             and customer support team associated to the Austrian
                             Divestment Business, i.e. [...] employees.
    2.      In accordance with paragraph 8 of these Commitments, the Divestment
            Businesses include, but are not limited to:
               (a) the     following      main  contracts,   agreements,   commitments      and
                    understanding:
                            the customer contracts of the Ingenico Belgian and Austrian
                             Clients Portfolio;
                            the customer contracts of the Worldline Luxembourg Clients
                             Portfolio.
               (b) the following customer, credit and other records:
                            to the best knowledge of the Combined Entity, the Ingenico
                             Belgian Clients Portfolio is currently estimated at approx.
                             [15000-20000] clients, the Worldline Luxembourg Clients
                             Portfolio is currently estimated at approx. [1000-2000] clients
                             and the Ingenico Austrian Clients Portfolio is currently
                             estimated at approx. [10000-11000] clients. The exact portfolios
                             will be confirmed at the Effective Date and regularly updated
                             by the monitoring trustee;
                            all corresponding merchant data and record.
3  Except cross-border merchants which have achieved in 2019 a Merchant Sales Value below 50% in
   Austria,    and a few public entities.
                                                   21
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Case No. COMP/M.9776                                                        24 September 2020
              (c) the following Personnel:
                           the management, sales and customer support team associated to
                            the Belgian Divestment Business, i.e. [...] employees, at the
                            option of the Purchaser;
                           all Ingenico's employees in Austria, i.e. [...] employees, at the
                            option of the Purchaser.
              (d) the Interim Service arrangements for the supply with the following
                   products or services by Worldline, Ingenico or Affiliated Undertakings
                   for a transitional period of up to 24 months after Closing, at the option
                   of the purchaser, and provided at costs during that period of time:
                        operations and product management, namely:
                               i.   transaction processing i.e. technical processing of
                                    transaction, namely authorization, clearing and
                                    settlement;
                              ii. customer and acquirer servicing (such as the call center
                                    or fraud handling);
                             iii. continued technical product management i.e. evolution
                                    of the technical processing and servicing platform
                                    functionalities for market demands and readiness for
                                    regulatory and scheme compliance.
                        Scheme licenses and payment institution licenses: Ingenico and
                            Worldline have generic licenses for international payment
                            schemes which are not specific to the Belgian, Luxembourg and
                            Divestment Packages. The Purchaser(s) is/are reasonably
                            expected to have such licenses or to obtain/extend them for
                            operating in Belgium, Luxembourg and/or Austria. Operations
                            under the interim service agreement will be conducted under
                            Ingenico’s (in Belgium and Austria) or Worldline's (in
                            Luxembourg) licenses while the business benefits and the
                            financial risks will be transferred to the Purchaser(s).
                        Other functions as might be reasonably necessary to facilitate
                            the transition, such as an interim license to use the trademark at
                            the option of the Purchaser(s).
              (e) the following Key Personnel: at the option of the Purchaser, all
                   Personnel and the Hold Separate Manager that will be appointed at a
                   later stage;
              (f)  the following main tangible assets: customer contracts with Ingenico
                   Belgian and Austrian Clients Portfolio and customer contracts with
                                                   22
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Case No. COMP/M.9776                                                      24 September 2020
                   Worldline Luxembourg Clients Portfolio;
    3.     A list of all active merchants in 2019 included in the Ingenico Belgian and
           Austrian Clients Portfolio and the Worldline Luxembourg Clients Portfolio is
           provided as Annex A. Possible adjustments of the respective merchant lists will
           be made at Closing date in order to fully reflect updated active merchants at
           Closing date.
    4.     The Divestment Businesses shall not include:
               (a)     cross-border merchants which have achieved less than 50% of their
                       MSV in 2019 in Belgium for the Ingenico Belgian Clients, cross-
                       border merchants which have achieved less than 50% of their MSV in
                       2019 in Austria for the Ingenico Austrian Clients Portfolio, as well as
                       public entities merchants, to the extent that these assets are not
                       necessary for the viability and the competitiveness of the Divestment
                       Businesses;
               (b)     trademarks, service marks or brands or any licenses thereto as there
                       is no specific trademark for the business undertaken by Ingenico in
                       Belgium or Austria, or by Worldline in Luxembourg;
               (c)     operations (processing, servicing) and technical product
                       management to the extent they are not transferable and will be
                       provided under the Interim Service Agreement at the option of the
                       Purchaser(s);
               (d)     scheme licenses and payment institution licenses, and other
                       regulatory authorizations to the extent they are not transferable and
                       will be provided under the Interim Service Agreement at the option
                       of the Purchaser(s).
    5.     If there is any asset or personnel which is not be covered by paragraph 2 of this
           Schedule but which is both used (exclusively or not) in the Divestment
           Businesses and necessary for the continued viability and competitiveness of
           the Divestment Businesses, that asset or adequate substitute will be offered to
           potential purchasers.
                                                  23
 ---pagebreak--- ANNEX 2
Clients with ACQ Services in SMB BE
[...]
              MSV 2019          TRX 2019 # merchants
TOTAL         [...]             [...]    [15000-20000]
 ---pagebreak--- ANNEX 3
Worldline local CTAP portfolio in Luxembourg in 2019
Billing ID      Merchant        Sector   TRX 2019    MSV 2019 REV 2019
                Billing Name
[1.000-2.000]                            [...]       [...]    [...]
[...]
 ---pagebreak--- ANNEX 4
Clients with ACQ Services in SMB AT
[...]
              MSV 2019          TRX 2019 # merchants
TOTAL         [...]             [...]    [10000-11000]