eBay-PayPal exclusive dealing - what now?
Some time ago, eBay announced a new policy which would force all buyers and sellers in Australia to use PayPal to pay for their purchases. PayPal is a wholly-owned subsidiary of eBay, and charges commissions on transactions processed through it, so this was seen by many as a cynical and anti-competitive money grab.
Recognising the possibility that this new policy would contravene the exclusive dealing provisions in s 47 of the Trade Practices Act 1974, eBay made a 'notification' to the ACCC under s 93 of the TPA. The effect of the notification is that while it remains in force, the conduct described in the notice cannot contravene s 47(1), but if the ACCC is satisfied that the conduct has the purpose or likely effect of significantly lessening competition, and the public benefits of the conduct will not outweigh the public detriments, it can revoke the notification.
The ACCC called for submissions from the public, and invited a number of 'interested parties' to make submissions. I think it's safe to say that they were overwhelmed by the response. The ACCC received over 500 submissions, the majority from irate eBay users. I understand that this is the highest number of submissions that the ACCC has ever recieved on an exclusive dealing notification, by a large margin. A number of organisations also made submissions, including EFA, American Express, the Australian Securities and Investment Commission, the Reserve Bank of Australia, Commonwealth Bank of Australia, and others. Not a single submission supported eBay's proposal.
The ACCC has said they will advise their decision before the new policy is supposed to take effect, on the 17th of June. I think the ACCC is likely to revoke the notification, unless they drink the market-definition koolaid which eBay's tame economists wrote in the annexure to their notification -- an annexure which the public wasn't allowed to see. eBay can then do one of three things:
Recognising the possibility that this new policy would contravene the exclusive dealing provisions in s 47 of the Trade Practices Act 1974, eBay made a 'notification' to the ACCC under s 93 of the TPA. The effect of the notification is that while it remains in force, the conduct described in the notice cannot contravene s 47(1), but if the ACCC is satisfied that the conduct has the purpose or likely effect of significantly lessening competition, and the public benefits of the conduct will not outweigh the public detriments, it can revoke the notification.
The ACCC called for submissions from the public, and invited a number of 'interested parties' to make submissions. I think it's safe to say that they were overwhelmed by the response. The ACCC received over 500 submissions, the majority from irate eBay users. I understand that this is the highest number of submissions that the ACCC has ever recieved on an exclusive dealing notification, by a large margin. A number of organisations also made submissions, including EFA, American Express, the Australian Securities and Investment Commission, the Reserve Bank of Australia, Commonwealth Bank of Australia, and others. Not a single submission supported eBay's proposal.
The ACCC has said they will advise their decision before the new policy is supposed to take effect, on the 17th of June. I think the ACCC is likely to revoke the notification, unless they drink the market-definition koolaid which eBay's tame economists wrote in the annexure to their notification -- an annexure which the public wasn't allowed to see. eBay can then do one of three things:
My money is on options 2 and/or 3.
- Back down and abandon the change. I don't think this is likely, especially since eBay apparently want to introduce this policy globally;
- Appeal the ACCC's decision to the Australian Competition Tribunal; or
- Go ahead with the policy change regardless. Given that the ACCC can't revoke the notification unless they're satisfied that eBay's policy change would contravene s 47(1) of the TPA, eBay would effectively be saying 'we'll see you in court' to the ACCC.
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