EU merger guidelines payments: implications for UK deals
In short: the draft EU merger guidelines payments reset gives heavier weight to scale and resilience, formalises ecosystem theories of harm, and introduces the Innovation Shield for start-up acquisitions. The European Commission opened the public consultation on 30 April 2026 and feedback closes on 26 June 2026. UK and EU now sit on broadly aligned ex-ante rails for payments. The UK-side levers that bite on payments M&A are the DMCC Act 2024 hybrid acquirer-foothold test in section 23 of the Enterprise Act 2002 and the PSR’s direction toolkit; the SMS merger-reporting trigger applies only to acquisitions by designated firms (currently Apple and Google for mobile platforms).
If a UK payments deal also needs European Commission clearance, the test Brussels applies is changing. The Commission has rewritten its EU merger guidelines for the first time in two decades. For payments, the changes bite on four fronts: scale in payments infrastructure; mobile wallet and super-app ecosystems; gatekeeper acquisitions of small innovative firms; and foreclosure of access to payment rails. The UK substantive merger test does not change, but the gap with the EU is narrower than headline post-Brexit framings suggest.
Regulatory background and consultation timing
EU merger control sits in Council Regulation (EC) 139/2004, the EU Merger Regulation. Article 2 sets the substantive test: significant impediment to effective competition (SIEC) in the internal market. The 2004 Horizontal and 2008 Non-Horizontal Merger Guidelines have governed how the Commission applies that test for two decades. On 30 April 2026 the Commission published a single Draft Communication consolidating both and opened a public consultation that closes on 26 June 2026. The Commission targets final adoption later in 2026. The Article 2 SIEC test does not change; the inputs the Commission will accept and the weight it will give them do.
The UK position runs in parallel. The Competition and Markets Authority applies the substantial lessening of competition (SLC) test in Part 3 of the Enterprise Act 2002 (sections 35 and 36). The Digital Markets, Competition and Consumers Act 2024 raised the target turnover threshold to £100 million and added a 33%/£350 million hybrid acquirer-foothold test in section 23(4C) to (4G) from 1 January 2025. Part 1 Chapter 5 of the same Act (sections 57 to 62) introduced a mandatory pre-event reporting obligation on firms designated as having Strategic Market Status (SMS) for any UK-connected acquisition above £25 million consideration, with the CMA empowered to make an initial enforcement order under section 72 of EA 2002 to standstill completion. Sector regulation of payments sits in the Financial Services (Banking Reform) Act 2013, the Payment Services Regulations 2017 and the retained Interchange Fee Regulation as corrected by SI 2019/284. The PSR/FCA consolidation announced on 28 April 2026 moves PSR functions to the FCA but leaves the underlying powers in place.
Antitrust runs alongside merger control on both sides of the Channel. Articles 101 and 102 TFEU, and their UK counterparts in Chapters I and II of the Competition Act 1998, govern card-scheme governance, multilateral interchange and access to payment infrastructure. The leading authorities sit close together. In Mastercard Inc v Commission (C-382/12 P) ECLI:EU:C:2014:2201 the Court of Justice confirmed that scheme MIFs are a restriction by effect under Article 101(1). On the same day, in Groupement des cartes bancaires (C-67/13 P) ECLI:EU:C:2014:2204, the Court held that the by-object category cannot be expanded to cover pricing arrangements whose anti-competitive character is not self-evident in their economic and legal context. The UK Supreme Court adopted the same framework in Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24, confirming the zero MIF counterfactual.
Analysis: four EU merger guidelines payments shifts that matter
First, scale, innovation, investment and resilience are now procompetitive factors. Paragraph 11 says the Commission “regards positively mergers that increase procompetitive scale while maintaining effective competition in the internal market”. The same paragraph adds that the growth and scaling-up of firms to reach the size to compete in global markets “can be procompetitive and have a positive impact on the EU economy and its competitiveness, including on innovation and investment”. The 2004 Guidelines treated scale as a market-share input feeding unilateral and coordinated effects analysis. The Draft elevates it to a positive factor where the merging firms need internal-market size to compete with a small number of global incumbents in processing or card-network operation. Resilience is defined and operative: it picks up cybersecurity of payments infrastructure, supply-chain diversity and continuity of access to settlement systems. For payments, the shift recalibrates acquirer consolidation, processor combinations, scheme integrations and instant-payments rail roll-ups.
Second, loss of innovation competition is a free-standing theory of harm at Section II.B.4. The Commission may find a SIEC where the merger impedes innovation rivalry, the industry’s overall innovation capabilities or the parameters of competition in future products. Killer acquisitions and reverse killer acquisitions are explicitly named at paragraph 184. For payments, the theory engages BNPL roll-ups, fintech-acquirer acquisitions of pre-scale processors and gatekeeper acquisitions of AI-payments start-ups. Section II.B.4.3 introduces the Innovation Shield: where a transaction involves a small innovative company or an R&D project with dynamic competitive potential, the Commission in principle does not find a SIEC if any of paragraph 192(a) to (e) is met. Two conditions carry the load on payments: paragraph 192(b) sets a 40 per cent combined market-share ceiling with at least three other independent R&D firms of similar potential; paragraph 192(d) sets a 25 per cent combined ceiling for R&D capabilities. A fallback in (b) lets the shield cover a start-up acquisition where the primary test fails, but only if the acquirer is not the largest firm in the market or a gatekeeper.
Third, foreclosure at Section II.B.6 and entrenchment of a dominant position at Section II.B.7 apply directly to vertical and conglomerate transactions in the payments stack. The ability-incentive-effect framework carries through from prior practice. It applies to bottleneck access to payment infrastructure (card-scheme rails, instant-payments systems, NFC inputs, settlement and clearing access) and to scheme governance entrenchment. Two parallel instruments reinforce the Draft on mobile wallets: the Commission’s Article 9 commitments in Apple – Mobile Payments (Case AT.40452) of 11 July 2024, and Article 6(7) of the Digital Markets Act. Together they govern FRAND access to gatekeeper mobile platform features for third-party mobile wallets.
Fourth, portfolio effects and ecosystems at Section II.B.9.2 capture super-app payments bundling, mobile-wallet ecosystems combining identity, payments and loyalty, and embedded-finance offerings combining accounts, payments and lending. The scale principle in paragraph 11 does not displace ecosystem analysis where the acquirer is already large. Where the consolidation entrenches a gatekeeper position rather than enabling a smaller firm to reach internal-market scale, the entrenchment route at Section II.B.7 controls.
| Theme | EU Draft Merger Guidelines (30 April 2026) | UK position (CMA129 + DMCC Act 2024 + sector regulation) |
|---|---|---|
| Scale in payments infrastructure | Paragraph 11: Commission “regards positively mergers that increase procompetitive scale”; resilience and security of supply enumerated as parameters of competition | SLC test under EA 2002 ss.35-36; CMA129 (2021) treats scale through market-share and concentration analysis without an equivalent positive presumption |
| Killer acquisitions and start-up M&A | Innovation Shield at Section II.B.4.3; paragraph 192(b) 40% threshold with three independent R&D rivals; paragraph 192(d) 25% R&D capabilities ceiling; gatekeeper acquirers excluded from the (b) start-up fallback | Hybrid acquirer-foothold test in EA 2002 ss.23(4C)-(4G) captures killer-acquisition risk where acquirer holds 33% UK supply share and £350 million UK turnover; SMS pre-event reporting under DMCC Act 2024 ss.57-62 binds designated firms (currently Apple and Google for mobile platforms) on UK-connected acquisitions above £25 million consideration |
| Ecosystem and portfolio effects | Section II.B.9.2 explicit framework for ecosystems built around a core service; Section II.B.7 entrenchment of dominant position in a core market or across closely related markets | SLC test; CMA case practice has applied ecosystem analysis without formal Guidelines language; SMS conduct requirements run in parallel |
| Foreclosure of payment infrastructure | Section II.B.6 ability-incentive-effect framework applied to data inputs and platform access alongside traditional supply-chain inputs; reinforced by DMA Article 6(7) and Apple – Mobile Payments commitments (AT.40452) | SLC test; PSR Specific Directions on access and card-acquiring under FSBRA 2013 ss.54 and 56; iOS interoperability commitment accepted from Apple under DMCC Act 2024 on 1 April 2026 |
| Sector overlay | EU Interchange Fee Regulation (Regulation (EU) 2015/751); PSD2; proposed PSD3 and Payment Services Regulation; Instant Payments Regulation (Regulation (EU) 2024/886); DMA Articles 5(2) and 6(7) | Retained IFR (corrected by SI 2019/284); FSBRA 2013 Part 5; PSRs 2017 (SI 2017/752); EMRs 2011 (SI 2011/99); HMT Payments Regulation Modernisation Package (28 April 2026) |
EU merger guidelines payments: implications for UK deals
For UK payments M&A with EU jurisdiction, three sets of implications follow.
Gatekeeper acquirers of small innovative payments firms walk a narrower path through the Innovation Shield. Conditions (a), (c), (d) and (e) are open to gatekeepers on their stated terms. Condition (b) is open if the parties combined sit below the 40 per cent threshold and at least three other independent R&D firms remain. The (b) fallback for start-up acquisitions excludes gatekeepers and the largest firm in the relevant market. Gatekeeper acquirers in BNPL, fintech-acquirer and AI-payments deals therefore work the substantive route through the alternative conditions on each transaction. The shield is not a general presumption for them. The gatekeeper definition at footnote 278 references Article 2 of the Digital Markets Act (Regulation (EU) 2022/1925).
Payments-infrastructure consolidation now reads against an explicit procompetitive scale principle. Established Commission case practice in Worldline / Equens (M.7873, 20 April 2016, conditional clearance), Worldline / Ingenico (M.9776, 30 September 2020, conditional clearance) and Nexi / Nets (M.10075, 8 March 2021, unconditional clearance) defines narrow product and Member State markets for acquiring and processing services and clears with structural divestments where horizontal overlap is country-specific. The Draft is continuous with that practice. It does not disturb the case-law spine; it adds the procompetitive-scale framing on top.
The PSR’s direction toolkit shapes the UK side of the same deals. FSBRA 2013 sections 54, 56 to 59 and 62 give the PSR powers to give general directions to a class of participants, specific directions to named participants, and to vary access contracts in advancement of its objectives. Specific Directions 14 and 15 require summary boxes and online quotation tools from card-acquiring providers. Specific Directions 20 and 21 implement the mandatory authorised-push-payment fraud reimbursement regime on Faster Payments and CHAPS, with effect from 7 October 2024 and a £85,000 cap per claim. The Administrative Court in R (Mastercard Europe SA) v Payment Systems Regulator [2026] EWHC 64 (Admin) upheld the PSR’s general direction capping interchange fees on UK-EEA cross-border consumer card transactions, confirmed the breadth of section 54, and held that the PSR’s concurrent competition powers extend to any payment system active in the UK.
Conduct regulation sits on both sides of the Channel, achieved through different instruments. The EU’s Digital Markets Act imposes per-se obligations on designated gatekeepers under Articles 5 to 7. Article 5(2) constrains data-fusion by gatekeepers running an advertising platform alongside a payment service. Article 6(7) requires FRAND interoperability with hardware features on gatekeeper mobile devices. The Interchange Fee Regulation caps multilateral interchange fees at 0.2 per cent (debit) and 0.3 per cent (credit) for four-party consumer card transactions. PSD2 sets the open-banking access framework. PSD3 and the proposed Payment Services Regulation are in the EU legislative process. The Instant Payments Regulation (Regulation (EU) 2024/886) mandates instant credit transfers in euro across the EEA at pricing parity. The UK SMS regime covers the same ex-ante ground through bespoke conduct requirements. The architectures differ; the substantive reach is comparable.
The UK-side levers on payments M&A sit in three places, ranked by reach. First, the DMCC Act 2024 added a hybrid acquirer-foothold threshold to section 23 of the Enterprise Act 2002 (subsections (4C) to (4G)). The CMA takes jurisdiction over an acquisition of a UK-nexus target where the acquirer holds 33 per cent UK supply share and exceeds £350 million UK turnover. The threshold catches killer acquisitions of fintech, payments and platform targets that fall below the £100 million target-turnover test. The EUMR has no equivalent. Second, the PSR’s direction toolkit under FSBRA 2013 sections 54, 56 to 59 and 62 shapes access conditions and pricing on payment systems separately from the SLC test and on its own timetable. Third, DMCC Act 2024 Part 1 Chapter 5 (sections 57 to 62) imposes a mandatory pre-event reporting obligation on designated SMS firms for any UK-connected acquisition above £25 million consideration. Apple and Google are the only SMS-designated firms (mobile platforms, 22 October 2025), so the reporting trigger bites on payments M&A only where Apple or Google is the acquirer of, for example, a UK BNPL or wallet provider. The CMA may then issue an initial enforcement order under section 72 of EA 2002 to suspend completion. Article 14 of the DMA is the EU equivalent on gatekeepers but is informational only. Our regulatory due diligence page sets out the scope on EU and UK competition risk in payments transactions.
Viewpoint
The EU merger guidelines payments reset does two things at once. It tightens the analysis of platform and ecosystem deals (paragraphs 184 and 192, Sections II.B.6, II.B.7 and II.B.9.2). It widens the working vocabulary on procompetitive scale in payments infrastructure (paragraph 11 and the resilience parameter). The two pulls do not contradict. Established case practice already accepts narrow market definitions and conditional clearances where horizontal overlap is country-specific; the Draft is continuous with that. The shift it introduces is the formal weighting of innovation and ecosystem theories on gatekeeper acquisitions of small innovative payments firms, with the Innovation Shield’s alternative-conditions structure deciding whether the shield applies.
The post-Brexit divergence on payments M&A is real but narrow. The SLC test in sections 35 and 36 of the Enterprise Act 2002 and the SIEC test in Article 2 of the EUMR share an analytical core and have produced broadly similar outcomes on payments deals. There is no statutory rule of alignment for UK merger control after Brexit, so the CMA is free to depart, and may do so as the Commission’s case practice settles around the Draft. The conduct overlay is comparable in scope: the EU runs the Digital Markets Act, the Interchange Fee Regulation, PSD2/PSD3 and the Instant Payments Regulation; the UK runs the SMS regime under DMCC Act 2024, the retained Interchange Fee Regulation, the Payment Services Regulations 2017 and the PSR’s directions toolkit under FSBRA 2013 Part 5. The UK-side levers that bite most on payments M&A are the section 23(4C)-(4G) hybrid acquirer-foothold test and the PSR’s ex-ante direction toolkit. The DMCC Act 2024 SMS pre-event reporting trigger is structurally distinctive (Article 14 of the DMA is informational only) but is narrow on payments: it bites only when an SMS-designated firm is the acquirer, and Apple and Google’s mobile platform designations are the only ones in force. The telecoms post and the data and digital post in this series cover the same recalibration through other lenses; the payments perspective binds most directly on processors, acquirers, scheme operators and BNPL or AI-payments investors.
Contact
For advice on EU and UK merger control on a payments transaction, contact Rob Bratby at Bratby Law. We also advise on payments regulation and transactions across the UK and EU regulatory layers.
