EUROPEAN COMMISSION DG Competition

Only the English text is available and authentic.

REGULATION (EC) No 139/2004 MERGER PROCEDURE

Article 4(4) Date: 08/05/2024

EUROPEAN COMMISSION

Brussels, 8.5.2024 C(2024) 3267 final

PUBLIC VERSION

In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description.

Nordea Bank Abp Satamaradankatu 5 00020 Nordea Finland

OP Cooperative Gebhardinaukio 1 00510 Helsinki Finland

Finnish Competition and Consumer Authority Lintulahdenkuja 2A P.O.B. 5 00531 Helsinki Finland

OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’). With effect from 1 December 2009, the Treaty on the Functioning of the European Union (‘TFEU’) has introduced certain changes, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout this decision.

OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

Date of filing: 15 April 2024 Legal deadline for response of Member States: 7 May 2024 Legal deadline for the Commission decision under Article 4(4): 24 May 2024

Dear Sir or Madam,

1. INTRODUCTION

(1) On 15 April 2024, the Commission received by means of a Reasoned Submission a referral request pursuant to Article 4(4) of the Merger Regulation with respect to the transaction cited above. The parties request the concentration to be examined in its entirety by the competent authorities of Finland.

(2) According to Article 4(4) of the Merger Regulation, before a formal notification has been made to the Commission, the parties to the transaction may request that their transaction be referred in whole or in part from the Commission to the Member State where the concentration may significantly affect competition and which present all the characteristics of a distinct market.

(3) A copy of this Reasoned Submission was transmitted to all Member States on 15 April 2024.

(4) By letter of 26 April 2024, the Finnish Competition and Consumer Authority, (Kilpailu- ja kuluttajavirasto, the “FCCA”) as the competent authority of Finland, informed the Commission that Finland agrees with the proposed referral.

2. THE PARTIES AND THE PROPOSED TRANSACTION

(5) Nordea Bank Abp (“Nordea”, Finland) is a financial services provider incorporated under the laws of Finland and present in 21 countries with the Nordics as its main geographic focus. Nordea offers services to both household and corporate customers through its four business areas: Personal Banking, Business Banking, Large Corporates & Institutions and Asset & Wealth Management. Nordea’s payment services include, inter alia, issuing of payment cards, facilitating account-to-account transfers, sending and receiving e-invoices, and initiating credit transfer based payments in e-Commerce. Nordea also offers payment services in its mobile application Nordea Siirto.

(6) OP Cooperative (“OP”, Finland), belongs to the OP Financial Group (“OP Group”), a Finnish financial services provider. OP Group offers banking, investment, and insurance services to both retail and corporate customers through its three business segments: Retail Banking, Corporate Banking, and Insurance. OP Group, inter alia, issues payment cards, facilitates account-to-account transfers, and provides services for sending and receiving e-invoices and for initiating payments in e-Commerce. OP also offers payment services in its mobile bank application and in its mobile wallet Pivo.

(7) Nordea and OP together will hereinafter be referred to as the “Parties”.

(8) The transaction in question (the “Proposed Transaction”) concerns the establishment by Nordea and OP of a full-function joint venture (the “JV”) within a Finnish limited liability company Siirto Brand Oy (“Siirto Brand”), which is owned by Nordea and OP Group on a 50/50 basis. Currently, Siirto Brand, whose activity is limited to owning and managing the Siirto brand, does not have any market facing activities and thus does not generate any turnover. For this reason, it does not qualify as a full-function joint venture.

(9) On […], the Parties entered into a Business Transfer and Investment Agreement (the “BTIA”) to establish the JV. The Parties will enter into a Shareholders’ Agreement (the “SHA”) at closing.

(10) The JV will combine Nordea’s and OP’s Siirto branded payment messaging services and offer payment messaging services to merchants and participating banks.

(11) For merchants, the JV will sell its services directly and provide them with payment messaging services for three different use-cases: invoice, e-Commerce and point-of-sale (“POS”). This will allow merchants to offer customers to pay without invoicing details, solely based on their mobile phone numbers.

(12) For the participating banks, the JV will provide upstream messaging services allowing them to provide consumer-facing payment services in their respective channels.

(13) The JV will not offer any payment services or consumer-facing payment messaging services, nor will it process any payments.

Joint control

(14) Pursuant to the BTIA, the Parties will hold an equal number of shares and votes in the JV. According to the SHA, the Parties will each have the right to nominate […] members of the board and […] member of the board will be nominated by the Parties together. The chairman of the board is nominated for a […] term alternately by one of the Parties. In general, resolutions by the board will be made by […]. Certain matters require the consent of both Parties, including, […]. A deadlock resolution mechanism, which does not enable one shareholder to resolve the deadlock situation alone, is also foreseen by the SHA.

Full-functionality

(15) The JV will perform on a lasting basis all the functions of an autonomous economic entity. First, the JV will have its own management and key personnel, i.e., a board of directors, a managing director and a compliance and legal officer as well as ICT, sales, marketing, and customer service personnel. Second, the JV will generate income from the market, and […]. Third, all possible commercial relations between the JV and the Parties will be conducted at arm’s length. Fourth and finally, the Parties intend for the JV to operate independently and on a permanent basis. Consequently, the Commission considers that the JV will meet the criteria for full-functionality.

3. EU DIMENSION

(16) The Parties have a combined aggregate worldwide turnover of more than EUR 5000 million (Nordea: EUR […] billion; OP: EUR […] billion). Each of the Parties have achieved EU-wide turnover in excess of EUR 250 million (Nordea: EUR […] billion; OP: EUR […] billion). The Parties do not achieve two thirds of their EU-wide turnover from one and same Member State. Therefore, the Proposed Transaction has an EU dimension within the meaning of Article 1(2) of the Merger Regulation.

4. ASSESSMENT

(17) The Proposed Transaction results in horizontally and vertically affected markets in Finland in relation to payment messaging services provided by the JV and the Parties, and retail banking services provided by the Parties. The Proposed Transaction does not give rise to affected markets outside of Finland.

4.1. Relevant markets

4.1.1. Payment messaging services

4.1.1.1. Product market definition

(18) The Commission has in its previous decisions considered that the market for payment services should be segmented according to the payment situations in which the services are used, namely (i) point-of-sale payment services (POS), (ii) online payment services (e-Commerce), (iii) invoice payment services, and (iv) peer-to-peer payment services (P2P).

(19) The Commission has also considered narrower sub-segments within these segments, distinguishing mobile wallets from cash, online banking, card payments and from other online or invoicing methods, but ultimately left this question open.

(20) As the JV will not offer payment services, but rather payment messaging services, the Parties consider that the relevant product market should be the market for payment messaging services. They consider that a segmentation according to the payment situation (i.e., POS, e-Commerce, invoice, and P2P) could be appropriate, however, a sub-segmentation between account- or card-based payment messaging services would not be warranted, because both can be used to meet the same end-user needs and are used interchangeably by customers.

(21) In any event, for the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the precise scope of the product market can be left open as the Proposed Transaction gives rise to affected markets for payment messaging services, regardless of the precise product market definition.

4.1.1.2. Geographic market definition

(22) As for the geographic market definition of payment services, the Commission has in the past concluded that the geographic scope for POS and e-Commerce payments (including their plausible segments) is national or EEA-wide. The geographic scope for invoice services and for (mobile) P2P payments was deemed national.

(23) The Parties consider that the relevant geographic market for payment messaging services could be national or wider (Nordic- or EEA-wide).

(24) In any event, for the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the precise scope of the geographic market can be left open as the Proposed Transaction gives rise to affected markets for payment messaging services only in Finland, at national level. For the sake of completeness, if the markets were to be considered as wider-than-national (e.g., Nordic-wide or EEA-wide), they would not be affected.

4.1.2. Retail banking

4.1.2.1. Product market definition

(25) The Commission has in the past considered a separate product market for retail banking, including all banking services offered to private individuals and very small enterprises. The Commission has also considered, but ultimately left open, a possible segmentation of retail banking into (personal) current accounts, saving accounts (deposits), personal loans, consumer loans, mortgages, distribution of mutual funds and other investment products, as well as private banking services.

(26) The Parties consider that the relevant product market should be the market for retail banking. They submit that a further segmentation for specific retail products (such as account services) is not relevant, as those services are commonly provided to the customers together with other products and services and are not purchased separately.

(27) In any event, for the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the precise scope of the product market can be left open as the Proposed Transaction gives rise to affected markets for retail banking services, regardless of the precise product market definition.

4.1.2.2. Geographic market definition

(28) The Commission and the FCCA have generally considered the market for retail banking (and its plausible segments) to be national in scope due to the different competitive conditions in Member States.

(29) The Parties agree that the geographic market for retail banking is national.

(30) In any event, for the purposes of the Commission’s assessment under Article 4(4) of the Merger Regulation, the precise scope of the geographic market can be left open as the Proposed Transaction gives rise to affected markets for retail banking only in Finland, i.e., at national level.

4.2. Assessment of the referral request

4.2.1. Legal requirements

(31) According to the Commission Notice on case referral (the “Notice”), in order for a referral to be made by the Commission to one or more Member States pursuant to Article 4(4), the following two legal requirements must be fulfilled:

(a) there must be indications that the concentration may significantly affect competition in a market or markets, and

(b) the market(s) in question must be within a Member State and present all the characteristics of a distinct market.

4.2.1.1. The Proposed Transaction may significantly affect competition in a market or markets

(32) According to paragraph 17 of the Notice, the existence of an affected market is generally considered sufficient to meet the requirement set forth in Article 4(4) of the Merger Regulation.

(33) The Parties submit that there is a horizontal overlap between the Parties’ and the JV’s activities in the market for payment messaging services. The Proposed Transaction will give rise to horizontally affected markets in Finland for payment messaging services in (i) invoice, (ii) P2P, and (iii) e-Commerce.

(34) The Parties’ combined market share (in volume) for payment messaging services in 2022 in Finland was [20-30]% for e-Commerce, [30-40]% for invoice and [40-50]% for P2P payments. Their shares are considerably lower in the Nordic Region or at EEA level, below 20%, hence these wider-than-national markets would not be affected.

(35) There is also a vertical link between the payment messaging services which will be provided by the JV (and the Parties) and the retail banking services provided by the Parties.

(36) Whilst the Parties’ combined market share ranged from [20-30]% to [40-50]% in the upstream market for payment messaging services in Finland (depending on the relevant segment, see above), and was below 20% at Nordic or EEA level, their combined market share in the downstream market for retail banking was [60-70]% in Finland in 2022.

(37) On the basis of the Parties’ market shares, the Proposed Transaction results in horizontally and vertically affected markets in Finland, given the overlap between the Parties’ and the JV’s payment messaging services and the relationship between the JV (as a payment messaging services provider) and the Parties (as retail banking services providers).

(38) Therefore, the first legal requirement set forth in Article 4(4) of the Merger Regulation appears to be met.

4.2.1.2. The market(s) in question must be within a Member State and present all the characteristics of a distinct market

(39) According to paragraph 18 of the Notice, the second requirement set forth by Article 4(4) of the Merger Regulation is satisfied if the geographic scope of the markets where competition is affected is national or narrower than national. This entails that competition concerns in other Member States than Finland can be excluded.

(40) The markets for payment services and retail banking services are both characterised by national elements and defined mostly as national in scope by the Commission. In any case, as indicated above, the Proposed Transaction does not give rise to affected markets outside of Finland, i.e. at a wider-than-national level or in any other Member State. Its effects appear to be confined to Finland, as the JV will be active in Finland and serve Finnish customers.

(41) Therefore, the second legal requirement set forth by Article 4(4) of the Merger Regulation appears to be met.

4.2.2. Additional factors

(42) In addition to the verification of the legal requirements, paragraph 19 of the Notice provides that it should also be considered whether referral of the case is appropriate, and in particular “whether the competition authority or authorities to which they are contemplating requesting the referral of the case is the most appropriate authority for dealing with the case”.

(43) Paragraph 23 of the Notice states that “[c]onsideration should also, to the extent possible, be given to whether the national competition authority to which the referral of the case is contemplated may possess specific expertise concerning local markets”.

(44) First, the FCCA has specific expertise in the assessment of markets in the relevant sector at hand. In fact, the FCCA has in the past reviewed concentrations related to the retail banking markets in Finland. Furthermore, the FCCA’s previous decisional practice involves the Siirto payment receiver register and the Siirto brand.

(45) Second, in light of the information submitted in the Reasoned Submission by the Parties, the Commission considers that the effects of the Proposed Transaction are confined to Finland at national level. Thus, the case may require investigative efforts at local level that the FCCA seems better placed to conduct.

(46) Third and finally, a referral of the Proposed Transaction to the FCCA satisfies the need to preserve the benefit of the ‘one-stop-shop’ as there are no affected markets outside of Finland. The case would thus be referred in its entirety to a single competition authority, i.e., the FCCA, which is an important factor of administrative efficiency.

4.2.3. Conclusion on referral

(47) In light of the foregoing, on the basis of the information provided by the parties in the Reasoned Submission, the case meets the legal requirements set out in Article 4(4) of the Merger Regulation in that the concentration may significantly affect competition in a market(s) within Finland which presents all the characteristics of a distinct market.

(48) Moreover, the requested referral would be consistent with paragraphs 19–23 of the Notice, in particular because the FCCA appears to be the most appropriate authority to examine the Proposed Transaction.

5. CONCLUSION

(49) For the above reasons, and given that Finland has expressed its agreement, the Commission has decided to refer the transaction in its entirety to be examined by the FCCA. This decision is adopted in application of Article 4(4) of the Merger Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed) Olivier GUERSENT Director-General

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