news In a strongly worded letter to the Australian Competition & Consumer Commission (ACCC), Apple has rejected the formation of a mobile payments “cartel” proposed by four major Australian banks.
Should the ACCC grant permission for the group’s formation, it would have the right to “jointly negotiate the terms and conditions with third-party mobile wallet providers, including Apple, and institute a joint boycott during those negotiations”, the tech giant pointed out.
Further, Apple said, the banks’ application is so full of “factual and legal misstatements” that it has not been able to prepare a comprehensive submission. That will follow at “a later date”, the firm said.
In the meanwhile, Apple “strongly” urged the ACCC to reject the request for interim authorisation.
If granted, it said, the request would “harm consumers, lead to less competition and less innovation, and create a troubling precedent”.
The Cupertino-based firm went on to argue that three of the banks – Commonwealth Bank, National Australia Bank and Westpac – are three of the four biggest banks in Australia, and that “given their scale and market share”, the applicants are essential to its ability to offer Apple Pay on a “meaningful basis” within Australia.
The fourth financial institution in the applying group is Bendigo and Adelaide Bank.
Apple further confirmed that it “struggled” to negotiate agreements with the Australian banks when introducing its mobile wallet service to Australia.
“Unfortunately, and based on their limited understanding of the offering, the applicants perceive Apple Pay as a competitive threat,” Apple said. “These banks want to maintain complete control over their customers.”
“The present application is only the latest tactic employed by these competing banks to blunt Apple’s entry into the Australian market,” it added.
Apple’s claim is at odds with comments last December from Reserve Bank of Australia Governor Glenn Stevens who said in a letter to a Labor MP that he has not seen “any evidence” that Australia’s major banks are actively boycotting the Apple Pay mobile payments service.
Such a boycott would represent a “hard-core breach of the Competition and Consumer Act”, Apple said.
Accusing the banks of relying on “innuendo and misstatements” to support their application, Apple suggested the banks have “little direct insight” into Apple Pay or Apple’s terms.
To back up the claim, the firm said one of the four banks has “refused” to enter into a confidentiality agreement with Apple to discuss the terms under which it might participate in Apple Pay.
The banks’ application to the ACCC for permission to negotiate with Apple as a collective group is aimed to “force Apple and other third party providers” to accept their terms, and allow them to charge consumers choosing to use Apple Pay, Apple said.
Innovation would be another victim of the banks’ plans, according to Apple, which said:
“It would slow innovation and reduce choices by protecting members of the cartel from competition with each other for the next three years. The banks would have little incentive to compete amongst themselves to develop the best and most innovative payment services for their customers.”
The ACCC and its predecessor have never before authorised a collective boycott. While the banks have sought ACCC approval on “public interest” grounds, Apple said it “cannot identify any public benefits that could arise from the boycott”, and further that the banks’ application “lacks any proper evidence that could safely be relied on to substantiate such benefits”.
The iPhone maker went on to say that the authorisation is “inappropriate” under the ACCC’s Authorisation Guidelines if it has the potential to be “significantly anticompetitive” and the applicant has not demonstrated “compelling reasons”.
“The banks have failed to provide compelling reasons in this case that would justify the significant risks of anticompetitive outcomes,” Apple said.
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