News

UK competition authority takes issue with Cardtronics-Direct Cash merger

May 5, 2017

The purchase by Cardtronics PLC of its U.K.-based rival Direct Cash Payments faces an in-depth phase 2 merger investigation unless the company can address CMA concerns about a "substantial lessening" of competition that could result from the merger.

Cardtronics and DCP supply free-to-use and pay-to-use ATMs in the U.K., a CMA press release said.

Independent ATM deployers in the U.K. face competition from banks and building societies to supply ATMs to large site owners in high ‘footfall’ locations such as supermarkets, shopping centers or transport hubs. However independent ATM deployers also supply smaller noncorporate customers whose cashpoints typically have lower numbers of transactions and are often pay-to-use.

Following its initial investigation, the CMA concluded that, in areas where there is insufficient competition from rival ATMs, the merger could lead to increased surcharge fees for customers withdrawing cash.

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, the authority said.

Cardtronics has until May 10 to provide an action plan addressing the substantial lessening of competition in relation to the supply of ATMs to users on a local basis, the release said. If none is offered or accepted, then the CMA will refer the merger for a phase 2 merger investigation.