German Regulator Opens PayPal Competition Probe

Germany’s federal trade regulator said on Monday it would initiate proceedings against PayPal Europe over the possibility the company obstructed competition.

The Federal Cartel Office said it was investigating PayPal’s user terms in Germany that block businesses from offering goods at lower prices if their users choose cheaper payment services.

The regulator said it’s also looking at how the company bars sellers from making alternative payment methods more convenient than PayPal.

“These clauses could restrict competition and constitute a violation of the prohibition of abuse,” said FCO head Andreas Mundt.

Market power

“We will now examine what market power PayPal has and to what extent online retailers are dependent on offering PayPal as a payment method.

“If businesses are prevented from taking into account the costs of payment methods, new payment methods can fare worse in price and quality competition or not even get into the market.”

PayPal didn’t immediately respond to a request for comment.

Changes to Germany’s antitrust law that took effect in 2021 give the FCO more power to identify and prohibit anti-competitive activities by companies in dominant market positions.

Expanded probes

The office has actions pending against Amazon, Apple, Facebook and Google, and recently sent Google an additional warning letter over customer data terms.

In November the FCO said it was using the new rules to expand two existing probes into Amazon, both of which involve third-party sellers on Amazon’s platform.

The FCO said it had identified Amazon as operating the most important e-commerce marketplace, allowing the office to apply the new rules.

The European Union’s Digital Markets Act (DMA), which was signed into law in September 2022 and becomes mostly applicable on 2 May, also applies more stringent rules to dominant companies.