PayPal was just fined $311,000 by a UK regulator over its $2.2 billion iZettle acquisition

AP

PayPal CEO Dan Schulman.

• The UK's competition regulator just fined PayPal £250,000 ($311,000) over its $2.2 billion acquisition of Swedish payments firm iZettle.
• The Competition and Markets Authority (CMA) said PayPal had breached the terms of an initial enforcement order issued last September.
• The regulator had ordered PayPal to make sure it kept its business separate from iZettle so the two effectively remain competitors while its investigation continued.
• But it found PayPal was cross-selling across its brands, directing UK customers to iZettle products.
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The UK's competition regulator has just slapped PayPal with a £250,000 ($311,000) fine over its $2.2 billion acquisition of payments firm iZettle.

iZettle is a Swedish company best known for offering plug-in card readers, and point-of-service hardware, which lets small businesses take credit card payments. American payments giant PayPal acquired the business last May, a day before iZettle was due to file for an IPO.

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The Competition and Markets Authority (CMA) opened a probe into the deal in September 2018 and issued an initial enforcement order which required PayPal to keep its business completely separate from iZettle's in the UK during the investigation.

Read more: A tech exec explains how it feels to spend 1.5 years preparing for a $226 million IPO, only to sell to PayPal for $2.2 billion

PayPal was given permission by the CMA to integrate the two businesses outside the UK, as long as this didn't affect UK customers. PayPal promised to comply.

On Tuesday, the CMA said PayPal had breached the order and cross-promoted the iZettle business to customers in Europe, including in the UK.

It said in a statement: "Despite its assurances ... PayPal conducted cross-selling pilot campaigns (intended to target customers in France and Germany) that led to it contacting UK potential customers.

"The impact of the breach was that, at the very least, UK potential customers could have perceived that the two businesses were integrated and were not being maintained separately."

The CMA cleared the acquisition in June, but is still fining the company for breaching its order. The regulator said it considered the £250,000 fine to be a proportionate penalty, given the severity of the breach. It is significantly below the maximum penalty of 5% of PayPal's turnover.

Business Insider has contacted PayPal for comment.