Agenda

TURKISH COMPETITION AUTHORITY PERMITTED THE ACQUISITION OF IYZICO BY PAYU

11/11/2019

Turkish Competition Authority (“TCA”) approved the acquisition of Iyzico by PayU which is controlled by Naspers. The full control of Iyzico will be transferred to PayU by means of this transaction.

Naspers is an international undertaking having investments in technology, media and e-commerce. Two major operations of Naspers in Turkey are the activities of PayU and Letgo. PayU is an international payment service platform and operates in Turkey through PayU Bilgi Tek. A.Ş. and PayU Ödeme Kuruluşu (PayU Turkey). Payu Turkey, a payment company licensed by Banking Regulation and Supervision Board (BRSA), provides virtual POS services and card data storage services. Letgo is an online platform service that enables the purchase, rental and sale of products and services like real estate, cars, electronics, used clothes etc. On the other hand, Iyzico is a payment service and electronic money organization. Iyzico offers an easy and secure payment management platform for e-commerce companies operating in various sizes and different areas. Iyzico also operates in the virtual POS services and card data storage services markets in parallel with PayU.

Iyzico and PayU Turkey are both financial technology (FinTech) companies. The activities of the parties overlap in virtual POS services and card data storage services markets horizontally . Parties have a vertical relationship between virtual POS services and online platform services of Letgo as well.

 The following remarks can be noted from the TCA decision::

  1. The “virtual POS services market”, where parties overlap, is a multiplayer market with a large number of banks and other virtual POS providers. Banks are direct competitors of PayU and Iyzico in this market. TCA determined that the competition in the market would not be adversely affected in the virtual POS services market as the market share of the the merged undertaking will be still very low after the merger, the market is competitive with a large number of players. and there are competitors with a serious customer networks such as banks.
  2. ’’Card information storage services market’’ the second horizontally overlapped market specific to this case, is considered as an independent market from payment services. This service can be supplied as a main or a subsidiary service by several undertakings as there is no entry barriers to the market such as licensing.  In order to identify the market power of the undertakings which provide card data storage service as an independent and professional service, TCA focused on the “activities of non-bank undertakings” and  selected “the number of cards stored” as the best  indicator available to foresee market share. TCA concluded that the power of the merged undertaking will be limited and it will create competitive pressure on the current market leader.
  3. Regarding the vertical relationship between  “online platform services market” and “virtual POS services market”, TCA took into considerations the market share analysis done in the past Sahibinden.com case and update information obtained from the parties. Accordingly, Letgo’s the market power will be limited in all possible market definitions. In addition, no sale agreement regarding service/product between Letgo and PayU Payment and Iyzico in the current situation.

Finally TCA approved the merger between these two fintech companies based on these assessments in the initial phase.