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 consulted on the draft from 30 April to 26 June 2026; adoption is expected in the fourth quarter of 2026 or early 2027, and the guidelines remain a draft as at 28 August 2026. The UK and EU ex-ante conduct regimes for payments are now broadly aligned. The UK levers 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 Google for general search and search advertising, and Apple and Google for mobile platforms).
If a UK payments deal also needs European Commission clearance, the test the Commission applies is changing. The Commission has rewritten its EU merger guidelines for the first time in two decades. For payments, the changes that matter concern 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 is set out 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 closed on 26 June 2026. The Commission targets final adoption in the fourth quarter of 2026 or early 2027; as at 28 August 2026 the guidelines remain a draft. The Article 2 SIEC test does not change; the inputs the Commission will accept and the weight it will give them do.
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 68) 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; under section 63 the reportable event may not take place before the report is given and before the end of a waiting period of five working days after the CMA gives notice under section 62 that it has accepted the report. Sector regulation of payments is set out 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 21 April 2026 is now carried by the Financial Services and Markets Bill 2026-27, introduced on 19 May 2026, which would move PSR functions to the FCA while leaving 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. 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: the EU merger guidelines payments shifts that matter
First, the draft treats scale, innovation, investment and resilience as 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. The draft defines resilience and treats it as a parameter of competition; for payments it covers 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. Under the draft, the Commission could 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 180 (footnote 258). 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 would in principle not find a SIEC if any of paragraph 192(a) to (e) is met. Two conditions matter for 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) extends the shield to a start-up acquisition where the primary test fails, but only where the acquirer is neither the largest firm in the market nor a gatekeeper.
Third, the draft addresses vertical and conglomerate transactions in the payments stack through foreclosure at Section II.B.6 and entrenchment of a dominant position at Section II.B.7. The ability-incentive-effect framework carries through from prior practice. Under the draft it covers 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, the draft deals with ecosystems and portfolio effects. The ecosystem framework is part of the entrenchment analysis at Section II.B.7 (paragraphs 252 to 254), drawing on the high-barriers-to-entry factors in Part II.A; portfolio effects are at Section II.B.9.2 (paragraphs 287 to 289). Together they 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 analysis proceeds under Section II.B.7.
| 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 Part 1 Chapter 5 (ss.57-68) binds designated firms (Google for general search and search advertising; Apple and Google for mobile platforms) on UK-connected acquisitions above £25 million consideration |
| Ecosystem and portfolio effects | Ecosystem framework within the Section II.B.7 entrenchment analysis (paragraphs 252 to 254), with high-barriers factors in Part II.A; portfolio effects at Section II.B.9.2 (paragraphs 287 to 289) | SLC test; CMA case practice has applied ecosystem analysis without formal Guidelines language; SMS conduct requirements run in parallel (Apple’s mobile platform commitments took effect on 1 April 2026) |
| 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 commitments secured from Apple under the DMCC Act 2024, announced 11 February 2026, with effect from 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 (21 April 2026) |
EU merger guidelines payments: implications for UK deals
For a gatekeeper acquirer of a small innovative payments firm, the Innovation Shield would apply on narrower terms. 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. A gatekeeper acquirer in a BNPL, fintech-acquirer or AI-payments deal would therefore have to satisfy one of 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).
The draft sets an explicit procompetitive scale principle against which payments-infrastructure consolidation would be assessed. 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 leaves that decisional practice in place; it adds the procompetitive-scale framing.
The PSR’s direction toolkit shapes the same deals in the UK. FSBRA 2013 sections 54 to 58 give the PSR its direction toolkit: directions to participants under section 54, changes to payment system rules under section 55, access requirements under section 56, variation of agreements relating to payment systems under section 57 and disposal of an interest in the operator of a regulated payment system under section 58. 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) construed that power. Cavanagh J held at paragraph 290 that the PSR has power under section 54 of FSBRA to impose the interchange fee caps it proposes. The judgment decides a question of statutory interpretation and nothing more: at paragraph 2 the PSR had made only a decision in principle, with the level of the caps and the date of implementation still to be settled, and at paragraph 3 the challenge was solely a vires challenge, so there was no direction before the court to uphold. The perimeter is narrow. At paragraph 47 the Part 5 sectoral regulation powers “apply only to regulated payment systems”, in contrast to the concurrent competition powers, which apply to all payment systems whether regulated or not, and at paragraph 125 sections 54 to 58 can be exercised only in relation to payment systems designated as regulated payment systems. Designation is HM Treasury’s act, by order under section 43 FSBRA on the criteria in section 44, and not the PSR’s.
The power the court construed is section 54 alone. Sections 59 and 61 carry the PSR’s concurrent competition powers, which the judge described at paragraph 78 as two separate strands, section 59 with the Enterprise Act 2002 and section 61 with the Competition Act 1998. For a transaction team the practical consequence is that a target operating a payment system the Treasury has not designated is outside the Part 5 direction toolkit, while the concurrent competition powers still apply to it.
Both the EU and the UK impose conduct regulation on payments, 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 at pricing parity, applying to EU payment service providers on phased dates, euro-area PSPs from 2025 and non-euro-area PSPs from 2027. The UK SMS regime covers the same ex-ante ground through bespoke conduct requirements. The instruments differ; the substantive reach is comparable.
Three UK levers apply to payments M&A, in descending order of 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 to 58 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 68) imposes a mandatory pre-event reporting obligation on designated SMS firms for any UK-connected acquisition above £25 million consideration. Google holds SMS designations in general search and search advertising (10 October 2025) and, with Apple, in mobile platforms (22 October 2025), so the reporting trigger applies on payments M&A only where a designated firm is the acquirer of, for example, a UK BNPL or wallet provider. Under section 63 of the DMCC Act 2024, the reportable event may not take place before the report is given and before the end of a five working day waiting period after the CMA’s acceptance notice under section 62. 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 tightens the analysis of platform and ecosystem deals (paragraphs 180 (footnote 258) and 192, Sections II.B.6 and II.B.7, with portfolio effects at Section II.B.9.2) and widens the working vocabulary on procompetitive scale in payments infrastructure (paragraph 11 and the resilience parameter). The two are consistent. 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 alternative conditions in paragraph 192 determining 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 applies the Digital Markets Act, the Interchange Fee Regulation, PSD2 (with PSD3 still in the legislative process) and the Instant Payments Regulation; the UK applies the SMS regime under the 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 levers with most reach 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 applies only when an SMS-designated firm is the acquirer, and the designations in force cover Google for general search and search advertising (10 October 2025) and Apple and Google for mobile platforms (22 October 2025). The telecoms post and the data and digital post in this series cover the same recalibration for telecoms and for data and digital businesses; the payments analysis matters most directly for 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 in the UK and the EU.
Correction, 12 July 2026: this post previously said HMT Payments Regulation Modernisation Package dated 28 April 2026; Mastercard v PSR described as holding on PSR’s concurrent competition powers; PSR/FCA consolidation announced 28 April 2026. That was wrong. The correct position is HMT Payments Regulation Modernisation Package dated 21 April 2026; PSR/FCA consolidation announced 21 April 2026; correctly described as holding on the general-directions power under s.54 FSBRA, verified against HM Treasury, ‘A streamlined approach to payment systems regulation’ consultation response, gov.uk; National Archives Find Case Law.
Correction, 19 August 2026: this post previously said the court upheld the PSR’s general direction, and that the general-directions power under sections 54 and 59 to 61 FSBRA extends to any payment system active in the UK. That was wrong on both counts. The PSR had made only a decision in principle ([2026] EWHC 64 (Admin) at [2]) and the challenge was solely a vires challenge (at [3]), so there was no direction to uphold; the general-directions power is section 54 alone, sections 59 and 61 being the concurrent competition powers (at [78]); and the Part 5 powers apply only to regulated payment systems (at [47] and [125]), designation being HM Treasury’s act by order under section 43 FSBRA. Verified against the judgment on National Archives Find Case Law and against legislation.gov.uk.
Correction, 28 August 2026: this post previously cited FSBRA 2013 sections 54, 56 to 59 and 62 as the PSR direction toolkit; described Apple and Google’s mobile platform designations as the only SMS designations in force; described the standstill on SMS merger reports as an initial enforcement order under section 72 of the Enterprise Act 2002; placed the ecosystem framework at Section II.B.9.2 of the draft guidelines; cited paragraph 184 for killer acquisitions; gave DMCC Act 2024 Part 1 Chapter 5 as sections 57 to 62; dated Apple’s iOS interoperability commitments to acceptance on 1 April 2026; and said the Instant Payments Regulation applies across the EEA. That was wrong. The correct position is sections 54 to 58 FSBRA (directions, system rules, access, variation of agreements, disposal of interest); Google was also designated in general search and search advertising on 10 October 2025; the standstill is the five working day waiting period under section 63 DMCC Act 2024 following a section 62 acceptance notice; the ecosystem framework sits in Section II.B.7 (paragraphs 252 to 254) with portfolio effects at Section II.B.9.2 (paragraphs 287 to 289); killer acquisitions are named at paragraph 180 (footnote 258); Chapter 5 is sections 57 to 68; the CMA announced the commitments as secured on 11 February 2026 with effect from 1 April 2026; and Regulation (EU) 2024/886 applies to EU payment service providers on phased dates. The consultation closed on 26 June 2026 with the guidelines still a draft, and the Worldline / Equens, Worldline / Ingenico and Nexi / Nets links now point to the Commission case register. Verified against legislation.gov.uk, the draft guidelines and the Commission case register.
