Belgacom / BNP Paribas Fortis mobile wallet venture cleared by Commission

The European Commission has cleared under the EU Merger Regulation the creation of a joint venture between the telecoms operator Belgacom and BNP Paribas Fortis, it announced this morning. The joint venture will allow consumers in Belgium to use their mobile devices to purchase goods or services, redeem coupons, or use their loyalty cards when visiting the mobile application of participating merchants. The Commission concluded that the proposed transaction would not raise any competition concerns, in particular because the joint venture will face several credible actual or potential competitors in this growing market.

The Commission assessed the impact of the transaction in the nascent sector of mobile commerce in Belgium and particularly its potential effects in the market for the retail provision of mobile wallets, where the joint venture will be active and where both parents have a small presence. The joint venture will offer a mobile application that customers can download for free. It will not directly offer payment functions but will be connected to one or several independent payment wallets in which customers can upload their payment card details to make secure payments to participating merchants. The market investigation revealed that several competing mobile wallet providers already exist or are very likely to enter the Belgian market in the near future, ensuring healthy competition between providers.

There is also a limited overlap between Belgacom and the joint venture in the provision of mobile advertising services. However, the services they offer are of a different type and a number of local and global players, such as Yahoo! are well-established in the market. The Commission also carried out a comprehensive assessment of the links between the m-commerce activities of the joint venture and other markets where Belgacom and BNP Paribas are active.

Given the existence of credible alternative payment cards in the Belgian market, BNP Paribas Fortis will not be able to harm competing mobile wallets by restricting the use of its payment cards in such wallets. Offering merchants and customers the choice of using different payment wallets or cards would also make the joint venture's services more attractive.

Furthermore, Belgacom would not have the technical ability to block the access to its mobile network to competing mobile wallets. It would also be unable to harm competing mobile wallets by excluding those using a SIM-based Secure Element (i.e. a piece of hardware containing the sensitive data) from accessing its SIM cards. Indeed there exist alternatives to placing Secure Elements on SIM cards (they can also be placed inside the mobile phone itself or on a piece of external hardware clipped to the phone) and such a strategy would not affect customers of other mobile network operators.

Finally, the joint venture would be unable to harm mobile network operators competing with Belgacom by refusing access to the joint venture's mobile wallet, as many alternative wallets are or will become available. The joint venture and its parents also have no incentive to engage in such a strategy, as it would hamper the commercial development of the joint venture's mobile wallet.