Aussie banks denied bargain and boycott of Apple Pay

Aussie banks denied bargain and boycott of Apple Pay

ACCC issues a determination to CommBank, Westpac, NAB and Bendigo and Adelaide Bank

The Australian Competition and Consumer Commission (ACCC) has denied authorisation for some of the largest Aussie banks to collectively bargain with Apple and boycott Apple Pay.

The response follows a request by the four banks - Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank - to the ACCC on 13 February to narrow their request and negotiate with the tech giant.

In this, they requested the removal of collective negotiation on the potential to pass-through the fees Apple intends to impose on the payment system to their customers in Australia.

The banks also sought authorisation to bargain with Apple for access to the Near-Field Communication (NFC) controller in iPhones, and reasonable access terms to the App Store. This access would enable the banks to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet, without using Apple Pay.

The Aussie banks have been butting heads with the Californian powerhouse since July last year, when they banded together to seek permission from a competition regulator to intercept Apple.

On 19 August 2016, the ACCC assessed the applications for authorisation by the Aussie banks after deciding not to grant their request for interim authorisation.

In October last year, three of the four banks wrote back a submission to the ACCC, warning that Apple’s exclusive approach to its Apple Pay rollout in Australia would stifle the use of existing contactless payment infrastructure in Australia.

However, in November that year, ACCC rejected the request by these three banks to collectively negotiate Apple Pay terms with the tech giant.

Apple lashed out against the banks in February, suggesting that attempts by Australian banks to collectively negotiate on the terms of its Apple Pay platform could be viewed as a “Trojan Horse” manoeuvre used to normalise the public’s acceptance of new mobile payment fees.

ACCC chairperson, Rod SimsCredit: ACCC
ACCC chairperson, Rod Sims

In terms of the determination, ACCC chairman, Rod Sims, said the regulatory watchdog was not satisfied, on balance, that the likely benefits from the proposed conduct outweighed the likely detriments.

“We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets,” Sims said.

“While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits would be outweighed by detriments.”

He further explained that even though Apple providing the banks access to the iPhone NFC controller is likely to lead to increased competition in mobile payment services and that this was a significant public benefit, the likely distortions to and reductions in competition caused by the conduct would also be significant.

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Tags AppleWestpaccommbankacccNABBendigo and Adelaide Bank Ltdmobile paymentsRod SimsApple Pay


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