Fintech Sector Interim Measures

The Fintech sector has been at the forefront of a wave of interim measures in Latin America and the Caribbean, with six competition agencies issuing injunctions against the same companies in similar cases over a period of two years.

Interim measures are preventive and corrective tools that competition authorities can adopt during investigations into possible infringements of competition law, particularly in cases of alleged abuse of a dominant position. In Latin America and the Caribbean, most competition regimes contemplate the use of interim measures in their legal frameworks. However, competition authorities do not frequently resort to such interim measures, reserving their use for cases in which the plausibility of the law and the risk associated with the delay are sufficiently demonstrated.

Introduction to Interim Measures

Interim measures are an essential tool for competition authorities to prevent harm to the market and consumers while an investigation is ongoing. They can take various forms, including injunctions, fines, and other corrective measures. In the context of the Fintech sector, interim measures have been used to address alleged anti-competitive practices, such as exclusionary conduct and abuse of dominant position.

The use of interim measures in the Fintech sector is particularly important, given the rapid evolution of the industry and the potential for harm to consumers and new entrants. The digital transformation of the payment methods sector has created new opportunities for innovative companies to enter the market, but it has also raised concerns about the potential for incumbent players to stifle competition.

Injunctions Against Payment Card Brands

The actions of competition agencies in the payment methods sector are not new, as important interventions have been reported over the last several years, either regarding investigations for abuse of dominant position, market studies, or competition advocacy actions. In particular, a series of pro-competitive interventions have been identified in a significant number of countries, focused on card payment processors and acquirers, whose shareholders have been, in practically all cases, traditional banks.

These interventions have been aimed at promoting competition, opening up the market for payment methods, and eliminating barriers to the entry of new digital players. The background shows that, in light of the international discussion on the impact of the digital economy on markets and on the analysis and application of competition law, the payment methods sector, impacted by digital transformation, is the protagonist of a large number of cases and investigations that concern competition agencies in the region.

Three main types of cases have been identified: a first group of investigations against acquiring companies and processing card payments, generally in the hands of incumbent banks; a second group of complaints against the Mastercard and Visa brands; and a third group of complaints and open cases against BigTech companies. This article focuses on the second group of complaints due to its particular characteristic of having generated the “wave of interim measures” which, as mentioned, is an unprecedented event in the region.

The Wave of Interim Measures

This group of cases and investigations began to develop in 2022 when some regional Fintechs denounced the Mastercard and Visa brands. The complaints originated in certain practices and programs announced by the brands, the effect of which, alleged by the complainants, was the exclusion of Fintechs from the market. In particular, the practices were the result of a trademark rule that local processors, sub-acquirers or payment facilitators cannot add affiliates (or process their payments) if they are located outside the national territory.

The imposition of interim measures in these cases has been significant, with six competition agencies issuing injunctions against the same companies in similar cases. This wave of interim measures is unprecedented in the region and highlights the importance of the Fintech sector in the economy. The use of interim measures in this context demonstrates the commitment of competition agencies to promoting competition and protecting consumers in the digital economy.

Implications and Next Steps

The wave of interim measures in the Fintech sector has significant implications for the industry and for competition policy. It highlights the need for companies to ensure that their business practices comply with competition law and do not harm consumers or stifle competition. It also underscores the importance of competition agencies in promoting competition and protecting consumers in the digital economy.

As the Fintech sector continues to evolve, it is essential that competition agencies remain vigilant and proactive in addressing potential anti-competitive practices. The use of interim measures will likely continue to play a crucial role in promoting competition and protecting consumers in the industry. Companies must be aware of the potential risks of non-compliance and take steps to ensure that their business practices are pro-competitive and compliant with competition law.

What Should You Do About Fintech Interim Measures?

Companies operating in the Fintech sector must be aware of the potential risks of interim measures and take steps to ensure that their business practices are pro-competitive and compliant with competition law. This includes monitoring regulatory developments, conducting regular compliance audits, and ensuring that their business practices are transparent and fair.

Consumers also have a role to play in promoting competition in the Fintech sector. By choosing innovative and competitive services, consumers can help to drive innovation and competition in the industry. Additionally, consumers can report any suspected anti-competitive practices to the relevant competition agencies, helping to ensure that the market remains fair and competitive.

The wave of interim measures in the Fintech sector is a significant development that highlights the importance of competition policy in promoting innovation and protecting consumers. As the industry continues to evolve, it is essential that companies and regulators work together to ensure that the market remains fair and competitive.

Fintech Sector Interim Measures – Disclaimer

This article does not replace professional advice and should not be considered as such. Outcomes may vary depending on individual circumstances, and readers should consult a qualified professional for specific guidance.