In its second-ever deal block under a new merger review system, Chile’s National Economic Prosecutor has prohibited Santander Chile from taking a stake in a payment services provider that is already co-owned by two other banks.
Chile’s competition authority last Thursday said Santander’s Chilean subsidiary could not carry out its plans to acquire partial ownership of a local banking services company, on the grounds that the deal would result in a substantial lessening of competition in the digital collection and payment buttons market.
The Society of Collection and Payment of Services, or Servipag, offers a variety of post-payment physical and digital ancillary banking services. Banco Santander Chile planned to become the third equal partner owner of Servipag alongside Bank of Chile and Chilean bank Banco de Crédito e Inversiones.
The companies notified the deal to the authority last October. In February, the agency said it would take its investigation of the merger to Phase II. It raised concerns based on Santander’s position as one of the main players in the banking market, while Servipag as a payments facilitator is also a significant company.
The competition authority said in its first phase of reviewing the deal, it analysed markets including the payment of salaries, pensions and other benefits; services to banks; face-to-face and digital payment; the use and commercialisation of payment buttons; and the use and commercialisation of online payment platforms.
After this stage, the agency concluded it needed to evaluate more deeply the potential unilateral and coordinated risks to competition in the markets for payment, payment buttons and online payment platforms.
In its announcement of the merger block on 19 July, Chile’s authority said it had analysed market shares and concentration indexes, potential price hikes, and the nature of the companies’ competition in the national online banking market.
The enforcer said any potential efficiencies could not make up for the loss in competition. It added that it did not consider any potential commitments could counter the anticompetitive effect either.
The agency said it would explain its reasoning further in the decision, which has yet to be published.
Chile introduced its merger review regime in June 2017. It issued its first-ever merger block under the new law in May, when it barred baked goods maker Ideal from acquiring Alimentos Nutrabien, on the basis that the deal could lessen competition on the national biscuit and cookie market.
Santander and Servipag did not respond to requests for comment. They can appeal the authority’s decision to the Tribunal for the Defence of Free Competition.
Counsel to Santander, Banco de Crédito e Inversiones, and Bank of Chile
Philippi Prietocarrizosa Ferrero DU & Uría
Partner Ignacio Larraín in Santiago