RBS Royal Bank of Scotland Group PLC

By Ian Walker

LONDON--The U.K. Competition and Markets Authority said Wednesday it is concerned that Mastercard Inc.'s (MA) acquisition of VocaLink gives rise to competition concerns, and is seeking undertakings from the companies to address these issues.

They now have until Jan. 11 to offer a solution, or the regulator will refer the deal for an in-depth investigation, it said.

Last July MasterCard said it was buying 92.4% of VocaLink Holdings Ltd. in a deal valued at about $920 million. If the deal completes, a majority of VocaLink's current owners will retain a 7.6% stake for at least three years.

MastercardU.K. Holdco Ltd., a subsidiary of Mastercard already owns and operates credit and debit card schemes Mastercard, Maestro and Cirrus, and has also bid to supply infrastructure services to U.K. interbank payment systems.

VocaLink's technology provides the backbone for non-card transactions such as employer payroll deposits and consumer bill payments, processing over 90% of salaries, more than 70% of household bills and almost all state benefits in the U.K.

It also unites the infrastructure of Britain's automated teller machine network among its participating banks. VocaLink reported $240 million in revenue last year and processed more than 11 billion transactions.

Vocalink is owned by a consortium of 18 banks and building societies, with the four biggest being Royal Bank of Scotland Group PLC (RBS.LN), Barclays PLC (BARC.LN), HSBC Holdings PLC (HSBA.LN), and Lloyds Banking Group PLC (LLOY.LN).

Last July, after the deal was announced the U.K. Payment Systems Regulator said the four largest shareholders of VocaLink should sell all, or part of their holdings in the infrastructure provider if its acquisition by MasterCard doesn't go ahead, to open up the market and boost competition.

At the time of the deal, RBS confirmed it would sell its 21.4% shareholding in VocaLink and book a 150 million pound ($184.08 million) pretax gain in its accounts. Barclays also said it has sold 13.68% of its shareholding in VocaLink for GBP104 million, leaving it with a 1.5% stake.

-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749

(END) Dow Jones Newswires

January 04, 2017 04:14 ET (09:14 GMT)

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