The ACCC is considering the competitive and public
benefit effects of eBay's proposal to force customers
to either use its online payment system, PayPal or pay for
goods on delivery.
The ACCC has issued a draft notice proposing to revoke
Currently, sales on eBay can be completed by using various
payment methods including cash, personal cheque, money order,
credit card, bank deposit or payment via an online system (such
eBay is proposing to make it mandatory for Australian
customers to either pay cash on delivery or use eBay's
own online payment system, PayPal. Direct debits, personal
cheques or money orders will be forbidden and sellers will be
forced to pay PayPal a commission to accept an online payment.
Buyers will pay no more to use PayPal.
Since 21 May 2008, sellers have already been required to
offer PayPal as one of their accepted payment methods, but the
ACCC has requested that eBay delay the second phase of the
proposal until the ACCC has completed its assessment of the
potential competition and public benefit effects of the
proposal. This could take up to a month.
Why did eBay notify the ACCC in the first place?
Exclusive dealing is the imposition of restrictions by a
company, on another's freedom to choose with whom, in
what or where they deal. Section 47 of the Trade Practices Act
1974 prohibits exclusive dealing if it has the purpose or has
or is likely to have the effect of substantially lessening
Under eBay's proposal, customers will be restricted
from processing payments for eBay transactions other than
through PayPal or paying on pickup, so the exclusive dealing
provisions may be relevant.
How does the notification system work?
Businesses may obtain immunity for bundling or
"tying" conduct, that might otherwise risk
breaching the exclusive dealing provisions of the Act, by
lodging a notification with the ACCC. Broadly, (and with
certain exceptions) once a notification is lodged with the
ACCC, the business is automatically immune from a breach of the
provisions, unless the ACCC investigates and revokes the
The ACCC may revoke a notification where it is satisfied
that the conduct is likely to have the effect of substantially
lessening competition and that in all the circumstances
no public benefit has resulted or is likely to result
from the conduct; or
any public benefit likely to result would not outweigh
the detriment to the public constituted by the lessening of
In this way, the notification regime places the burden on
the ACCC to investigate and make findings in relation to the
notification. Before revoking a notification, the ACCC will
issue a draft of its reasons and provide an opportunity for
interested parties to participate in a conference to discuss
Where the ACCC decides to withdraw the immunity, the
protection ceases 30 days after the ACCC notifies the business
of the decision
Over 800 submissions have been received, overwhelmingly
against the proposal, including a 38-page submission reported
to be from Google. Google has its own payment system called
The ACCC raised concerns that the proposal will
substantially limit competition in the online payment services
market by limiting consumers' choice of payment
"PayPal currently competes with a range of other
providers to supply online payment services to users of
online marketplaces. If the notified conduct is allowed to go
ahead, there will be no competition for the supply of such
services to buyers and sellers using eBay. Given
eBay's position as Australia's leading online
marketplace, the notified conduct will substantially reduce
competition to supply online payment services to users of
online marketplaces more generally."
eBay claims that its proposal will not substantially lessen
competition but will instead benefit the public by providing
more secure payment options for eBay customers. Users of PayPal
do not need to provide the seller with their personal
information such as bank account or credit card details and
PayPal will act as an intermediary in the event of a dispute.
Users of PayPal will be provided buyer protection of up to
$20,000 per eligible transaction under the proposal (currently,
the limit is $3,000).
If the proposal is implemented, it will be the first time
eBay has imposed a mandatory payment method anywhere in the
The ACCC is seeking submissions from interested parties
until 3 July 2008.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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In some cases these fees or surcharges are higher than what a bank charges to these merchants for use of the system.
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