European Commission Approves Spanish eCommerce Joint Venture

By Chanel Smith, EMEA Editor (@PYMNTS_EMEA)

The European Commission announced it’s approved a joint venture between the Spanish telecommunications operator Telefonica and two major Spanish banks, CaixaBank and Banco Santander. The collaboration emerged with the intent to create an online community for merchants and consumers in Spain. Services will include digital advertising and data analytics for merchants, and virtual wallet services and peer-to-peer payments for consumers.

Before making the decision to approve the powerhouse venture, the European Commission needed to assed the potential impact on the eCommerce market. The Commission’s objective was to ensure that the initiative would not consume market share, stifle competition or disservice consumers and the economy.

Guided by EU Merger Regulation, which is that part of the European law created to regulate the conditions of firm merging, the EC reviewed the current mobile market in Spain where the venture hoped to operate. Commission members considered how digital wallet services could potentially affect the market.

It concluded there are already several digital wallet firms that exist in Spain, and the Commission also expects that competition will increase in the near future. This reassured the board that the market was at a mature stage with adequate competition that can handle such a venture.

Upon further investigation, the EC also concluded there was little overlap between Telefonica’s operations and the joint venture in groundwork of the proposed digital advertising services, including online and mobile-based coupons and customer loyalty programs. The EC anticipates that all parties will continue to have competition coming from several mature global companies, such as Google and Yahoo.

EC officials were concerned that Telefonica might try and ward off competition by blocking digital wallet competitors’’ Internet access on mobile technology and broadband networks. Customers need mobile or static Internet connection to utilize digital wallet services, and the EC worried Telefonica would take advantage of this. However, it found that Telefonica does not have the technical ability to block such access. 

After thorough market investigation and exhausting possible outcomes, the Commission concluded that the Spanish joint venture would not be a threat nor impede competition. 

To read the full story click on the EC press release here.