PayPal’s takeover of iZettle has been referred for a Phase 2 investigation by the Competition and Markets Authority (CMA).

The CMA announced on 26 November that its Phase 1 probe into PayPal’s completed takeover of iZettle had raised concerns that the deal could leave PayPal facing insufficient competition in the UK market for mobile point-of-sale devices.

Concerns were also raised that the merger could negatively impact future competition in the emerging market for ‘omni-channel’ payment services, and potentially result in customers paying higher prices or receiving a lower quality service.

The CMA said it would refer the deal for an in-depth Phase 2 investigation unless PayPal offered acceptable ways to address its concerns.

As PayPal has chosen not to offer proposals to address the CMA’s concerns, the merger will now be referred for a Phase 2 investigation by an independent group of CMA panel members.

A Phase 2 investigation typically involves more extensive information gathering. If the positives for consumers outweigh the negatives, mergers can be cleared.

The deadline for the final decision is 21 May 2019.

PayPal took over iZettle on 20 September 2018.