The UK’s Competition and Markets Authority (CMA) has decided to conduct an in-depth investigation into Cardtronics’ acquisition of rival ATM provider DirectCash Payments (DCP) over competition concerns.
In October 2016, Cardtronics agreed to purchase DCP in a deal worth approximately $460m, including debt. The deal, if successful, will enable the acquirer to further expand its footprint in Canada and the UK. It will also give Cardtronics access to new markets such as Australia and New Zealand.
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Both firms provide free-to-use and pay-to-use cashpoints to site owners, including supermarkets, convenience stores and pubs in the UK.
The CMA said such companies face competition from banks and building societies to supply ATMs to large site owners in high ‘footfall’ locations including supermarkets, shopping centres or transport hubs.
After a preliminary enquiry, the CMA found that, in those local areas where there is ‘insufficient competition’ from rival ATMs, the merger could lead to inflated surcharge fees for customers withdrawing cash.
The watchdog further observed that given the potential lack of suitable sites and the cost of supplying new ATMs, entry into these local areas by competitors would not be sufficiently likely to prevent an increase in fees.
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By GlobalDataThe merger is now being referred for an in-depth phase 2 investigation by an independent group of CMA panel members – unless Cardtronics agrees to offer undertakings which satisfactorily address the substantial lessening of competition pertaining to supply of ATMs.
The CMA has asked Cardtronics to offer undertakings by 10 May 2017. If no undertaking is offered by Cardtronics or is accepted by CMA, then the matter will be referred for a phase 2 investigation.
