Our ref: THO60508 Your ref: ' C20081566

The General Mi Adjudication Br4 Australian Competition and Consumer Commission GPO CAN l

enager anch

Box 3131 BERRA A(

csimile: (0

'2:-1afi-.I-.. Dear OIIIIW~U~I

Re: E $Bay lnterr ; ("eBayS) - exclusive dealing notification N93365

I refel to 111t: awve rr~er~uoned exclus~e dealina notification lodged with the Cornrntss~on on 11 2008. In tk gives notic >poses to ! Bay Site o egistered L settle outs nline payn d by PayP 3 Pty Ltd, e tdiarv. Sucn an arranuemerir would be antrcom~er~r~ve and disaovanrageous ro me Interests

e and users of online financial services

April the e the o subs - ..

\is subrnis: n the cond lent servic L --

;ion eBay ! lition that r' es provide ...........

supply the itanding tri ?Bay's whc -A. .--.-A-

services o msactions dly owned _. _ ._ A,._

ffered on using

e that it prt Jsers must a1 Australi: I --___--I:A:

consumer neral.

,s participa Gng within the e8ay r narketplac

I make me rollowtrto suornlsslon on behalf of Cenrricom 9ty Ltd, the operatm of the POLiTM online lent servic

ricom laun

" e.

ched the F . . . Cent nfferi

'OLi servic ~* . . e into the A . . . market in 2 . . !006. Sincc 5 this'time, , the POLi

bthnd of ing nas servea ro oroaaen cnoice in me marrterpiace ana provtae a more secure me trans Bank rnerc need

..-.-- -. 'net ier and oving the

,acting online by cap~talising on unctionality offered in all mainstream Inter :ing environments. POLi facilita' rrnless transfer of funds between a custon

common f tes the sez yer's WCUI ... :hint directly from within the bv .e Internet banking environment, thus rem

1 for a buyer to disclose or transmit sensirive bank account or credit card detsiln

POLi servi South Afric . . . .

erates in fc he system . . .

)ur wuntric is operate . . . .

4s: Australi d in conjur . . . .

ia, New Ze rction with . . .

aland, the partner A1 . . .

The I and !

United Kir 'M Solutioi . . . .

ce now opt :a (where t .. --.

lgaom 1s).

3 its launcn, tne ruL l service nas steaally DUIN up mamet snare ana anraaea a awe- :hant base ranging frc mment del >rate enterprises. In, nately 6 m net users to pay for g ablished, 5

,ing channels

-. -- and large ralian met

rnerc COP' inten hank

om small a 4ustralia. t ids and :

ind start-uy: he POLi st services 01

) business mice allov ?line direct

es to govel vs approxi~ ly from est

9artments illi ion Austi iecure inte

e diverse 2 :isting and . -

payments market, the POLi sf ~t one of a number i to PayPalw. At this time, the I :e has not been

oved for use on the eBay marketplace, however at a future date, Centncom may se-k tn

beco form

mice is b~ POLi s e ~ c - . .

In thc of ex Dnnn

~ n d compe potential c

titive onlinc ompetiton - ".. .-

ider the

ar the

Ime an apy and intent

)roved pay : of the pro

,merit met1 posed con

rod, a circi duct.

imstance t' hat would I likely be pr ecluded ui

To assist the ACCC with its evaluation, aspects of this submission compare and consldf bene impli

!fits of a "P cations thi

'OLi enablc 3t the eBa)

3dn eBay v submissic

ersus a "P ,n may ha!

ayPal only' de on the t

well as ex1 ine payme

ploring the nt landsca

bicom Pty ttd Level 1, Sum 2,140 Llueen smr Melwurne vm +61 3 8601 5900 Fax: +613 8601 5999 E: infc@zntrkorn.corn - www.wnmcom.com SAUN rs ios ;~JJ bw

etray-s suDmrsslon

In its notification, eBay asserts that:

, Any resl rejecting the pub1

ulting loss. 3 deposits lic benefit (

in competf into bank 2

>f lessenec

tion by restnctlng payment servlces to only rayral and ~ccounts, debit and credit card payments, is outweighed by 1 fraud and increased confidence in using online payments.

lucing frauc d on the el 'ayPal is tl , online ma

thod of rec le only me rket place.

2. Limiting customer choice to f marketplace and the broader

eposit by means of internet banking is a less secure payment method tha 3

Centr

. Direct d PayPal.

tcorn conrenos rnar rnese asserrlons are Incorrect ana rnlsreaorng for the 1

petition ar

* %-.

~d Choice

9 . . - Tne emy mamerplace represents poss~ory one or tne largest onllne communlrles In Australla f not the world). As such, eBay significantly influences online consumer b ind by reventrng users from being exposed to alternative payment methods on tt iarketplace, eBay will be effectively driving buyer and merchant acceptanc ayPa1 ayment method to the exclusion of otherpayment methods readily available in the

~stralian forced

ehaviour a ie eBay :e of the P . . ..

~ustralian c iarket will I

offer the

dine mark mean that restricted F

:etplace. A1 competitor 'ayPaI ser

dditionally, s will be m vice.

PayPal's arginalizec

xofile and I due to on

position wi line merch,

ithin fhe AI ants being

We contend that by manaarlng me exciuslve use or rayral, eaay woula ~e actively restricting consumer choice and therefore stifling competition, not only within the eBa marketplace (which we submit is itself a "market" for the purposes of the Trade Practi Act), but also in the broader market where PavPal and the POL1 service compete a101 0

Y ces In side

lished pay1

naintains t . . . .

nent methr

hat freed01

n g ~ ~ ~ ant

? and the p . . ..

d credit ca~

rovision of

rds.

a broad, s . . C services wnlcn seeK ro serve tne Dest Interests or online mercnants and buyers snou~ alued above the perceived limitations of al ~nline payments systems and st luyers and merchants should be allowed tc .om a set of payment methods t wets their needs based upon on their own ?nts of security, utility and acce! In offer. All market participants should be able to select from a set of payment syster

-.. W"

ructures. hat best

lternative a 3 choose fi I assessmt . . . . jsibility

nc that

eep costs

it present, ... .

low and re

eBay pem

duces the

iits registel

risk of non.

red membc

payment :

?rs to use i - .

andlor frauc

3 number c . -

d.

)f acceptec - . . . l payment methods -. . - -3 settle sales ana purchases maae on the eBay slte where PayPal IS but only one mnthn* nf payment offered. Other methods include credit card payment, bank cheque, persone cheque, cash, and direct bank deposit. In a truly open marketplace, other payment methodologies such as the POLi service could also be made available. In promoting consumer choice amongst ava~lable payment methods, e8ay fosters competition (inc .,,..., fi e level per ir rom a pricim icluding cc

ng, and fro ~mpetitive I

lm a servic merchant (

?ficial flow on effects

41tnough etlay makes reterence to a number of semces and safeguards that may be nf~nr-d

3 users choosing to settte their transactions using PayPal, the true determinant of thl ~f these offerings should not come from the edict of the service provider but rt should letermined by the marketplace. Indeed market choice is what first allowed PayPal to

-1s the payment method of choice for eBay users back when eBay owned and ope rat^- ..-

f "rn,....."

e value be emerge d itc

Pag

Centricom Ply LM L d 1, Suite 2,140 Queen Streef Me~~oume waona, Atrsbalia 3MM - Ph: +61 3 8601 5900. Fax: +613 8801 5999 E: info@cenlncom.com . www.centrkom.com ABN 73 105 393 664

ay used sir 'al in this i

nilar nstance.

lwn comperrng paymem service suos~~tary trlrlrolnr inc. Interestingly, el3z !xclusivity tactics to mandate the Billpoint service to the exclusion of PayF

3 e Reserve Bank of Australia has a stated policy aimed at increasing competition' ific referen solutions payment o e Australia

and has nade spec ilternative

ce to onlin ptions des

e payment irable in th'

such as PC n context.

mples of tt le sort of

mihr . . Centricom notes that a4trtb,F,nl effects of the proposed eBay submission echoes si assertions made in the US, where two Anti Trust related ~our t cases are pending againsl eBay Inc. The antitrust lawsuit filed by the first plaintff Michael Malone on April 4.2007 alleges that eBay "utilizes its nationwide monopoly of the on-line auction market to monopolize the available forms of payment that sellers can use on e ~ a ~ . " ~ The second action filed by plainttffs Ann Farmer and Todd Van Pelt on April 23, 2007, ~ n d potential competition has been restrarned and that eBay sellers who r *s have paid or are likely to pay artificially inflated and supra competitive f e ~ ?xuects similar outcomes in the Australian market should eBay be Derrnitt~u LU ~ I U L ~

alleges t k nust accer 3s." Centric -A .- ---

3t actual )t PayPal mm eed with

t

Tran

he plans o

saction St

utlined in t

ecurity

. ~.

heir submi ssion.

eBay maintains in its submission to the ACC that individuals who choose to transact uslng direct deposit by means of internet banking are using a less secure payment r than PayPal.

online nethod

hntricom nherently I

submits th ess securc

at it is incc ? payment

rect depos sert that di an PayPal.

~rrect to as method th

its by inter net bankin g are an

I ne ram IS rnar In me presenr slruarron, ouyers ana sellers are racea wtrn a cnoice - that is ~hether to use PayPal, or some other payment methodology to settle a transaction. ?Bay asserts, buyers are driven by fear of "bad buyer experiences", then they would o settle the transaction with the perceived "safest" payment methodology by default \Itematively, they could choose not to transact with those merchants not offering "s;

lethods.

rts that wh ... , en using P 'ayPal, buy . . . , . , ,ers and se jt have to c .. . each

.. . xner tnelr crean card or account details to process transacttons, thereby decreasing the nsl< 3f either party unwittingly becomrng a victim of fraudulent activrty. The ab ~ithout divulging sensitive financial information is not unique to Paypal. / POLi service also does not require a merchant or a buyer to disclose any nformation to the other party in order to settle a payment trans~dinn

lility to tran h an exan sensitive :

sact nple, the account

Centricom :--- L.

contends l . - z ------. that settlin!

: - - _ I _

PayPal ca . ,. . -. ,.a. 3 a transaction using :hat it

requires nrvo rransacrtons ro remit the funds to a mercnanr (inree n rne rnercnanr aecides to credit funds to a nomrnated bank account), rather than one. That is first the consumer must

ey to their PayPal acj 3Li reduce such a ris ~ i t h a single transact1

?nt risk in 1 - - L - . ..

move mon~ such as P( merchant \

count and k by enabli ion.

then it is p. ng the seH

aid to the r tlement of,

nerchant. I funds from

Payment s I a buyer tc

ystems a

nent S~Stems Evolution When: to I h r n 11 ~ncral Systcm) o Australian m' Association and Aumlian Paynlents C t oqrcm:lt;r me v eBoy Inc., C s c NO. 07-01S%?-JI; ano raturn, LT iu Y. cwy, Im,. C w UO C-07-02209 are rctutr~l am,liwrs md mch cases

OIBYWF, and are r e f e d tc

cm' Philip Lo. I h g hwi A _* _ l

arc hc ne v cBay lnc .Cox No. 07-

Pa

, henin as thc

CentrioMn Pty Ltd Level 1, Suite 2.740 Queen Street Melbourne V-, Australia 3030 Ph. +61 3 8601 5900 Fax: +613 8601 5999 E: info@centrimmm www.cantrlcom.com ABN 73 105 393 864

Buyer and Seller Disputes

eBalfsubmits that its data indical sking payments on eBay eignificantly reduces the probabilrty OT elrner buyer or seller a~sputes arising. Individuals whn rould otherwise choose to transact on the eBay marketplace using a less : iethod than PayPal (such as direct bank deposit by means of internet ban irectly benefit from the mandated use of PayPal through a reduction in the

..wolved in a dispute, regardless of the additional benefit of buyer protectior

tes that the .. . ... ! use of Pa yPal for mi .. .. ..- .-..- ment 1 In9

;ecure pay king) woulc ! risk of bei n

lntil recent1 onducted c

. . .

ly, eBay of In the eBa

iered a "Bi y marketpl; . -

ryer Protec ace, regarc -

$ion Progri jless of the -

am" that sz ! payment

l . ns c ose to lee. We submit that this "Buyer Protectron Program" was one of the reasons that the eBay iarketplace became successful, as it offered a relatively "safe" way to transact for snsactions over a certain threshold amount. Unfortunately this "Buyer Protection Program" wr ras significantly changed recently, so that only those transactions that were completed using 'ayPal were covered. Nevertheless, other payment methods have continued to be used - 0th by sell eBay mark

transactio gy they chs

. . methodolo

ers and by

. - . . - - - a

purchaser

L - -. -.--- . s - on the

L . . , . . :entricom quesrlons me clams rnar me use of direct ban^ aeposlr maae via lnrerner i an king hannels leads to higher instances of buyer and seller disputes. Centrrcom submits that

~ t e d )king.

luyers wou iethod of F

rom being iich builds

able to acc on a famili

:ess and u: ar and trus

se the PO1 ited enviro~

-i service 2 nment of Ir

IS an accq itemet bar

r lmer vided,

:entricom suggests V,,, ,,,,us, u,a,uLcs ,cmL,, , ,, ,,u,blra,ca lllauc

ervice provided on its marketplace regardless of the payment n hooses. If the system cannot resolve disputes over purchases I ?en it should be the subject of control of further State and Fedei

lethad thai nade or se rat consurr

: the consu r ~ c e s pro ler law.

d on the e

!Say has SI .. ,.-h-..- -.

Bay Markc atpiace

tat one oft .̂ A. ...LA .̂. lsumers deaue not to

IUILI lase auviriuf lai ~IUUUL~D UII UIC e w y 11101 netvldLe cne t i us& and safety" issues, \-.":-'

re classed as "bad buyer experiences". Cc " include ( i Rhers) fraudulent unauthorized use of buyc tails w h e ~ nethod of payment has been used that invi lccount or ard details

ubmitted tt .JA;&;-..-l ... he two big!

.I.̂ m̂a.. - ns that cor .. --A n.... .-a NI IICil l

amongst ! a credit

~mmon "bz ?r credit ca olves disclc

ad buyer e) rd and/or 2 sure of fhj

tperiences nccount de e buyer's E

nent ost . - . . - . -

submits t h e made av .-I..& ̂^^ r

cl safety" is assist cons nnt : --..-

;entricom !

nethods ar ,. .:L-l.l~ --- at "trust ant ailable to i .u.... :- &I.- I

other payr e of the ml A&-- --. L

sues may be further removed if umers in managing this risk On

b~~~~~~ ~ V U U C . I ~ UII UII~I ID U I ~ ruu payillent service, because the buyer urns rlur r lisclose any account or credit card details to make the payment. As with P 3op system, POLi enables the ability to seamlessly transfer funds directly ~ominated lnternet bank account to a nominated online merchant's accour

ionfines of the buver's secure and familiar lnternet Bankina ao~lrcation.

lave 10 wed ,er's i the

ayPal's clc from a buy ~ t , all withir

- . .

ketplace

1-I L- 'I-- - ryment mc eBay Marl

.... n-I -I.-. . Centllwlll O U U ~ ~ ~ ~ S that ebav s vluvuaal t r l a r a v r a l SIIUUIU w u~e: aule ar;xieu~sd form of unllrle lccepted ially o will _-----I

payment on the eBay marketplace'(thereby creating a monopoly position) should not be ; by the Commission. The mandatina of this ~avment method in that rnarket~lace substant i&ens choice for all consumers (whether ihey are sellers or buyers of products) and als have the tendency to increase the cost of doina business on eBav. Anv additional wst irr on st sllers will a itably be pi

o consider

buyers.

above, no1 We asK me c;or intnrost of all AL,,,~,,,,,,

nmission t ,,l.+r4ion r.

t in Centric om's inter( ?st, but in t

rage 4 of 5

Mcom Ply Ltd Levd 1, Suite 2,140 Queen Street Melbowne Victoria, Australia 30013- 61 3 8601 5900. Fax: +613 8601 5999. E: lnfo@cenbicom.com www.centdwm.com ABN 73 105 39

Yours sincerely

e, I CEC Cenl

)n Warner I

:ricom Pty Ltd

teen Street M n. F. .---..

Page 5 of 5

CenaicomPtyLtdLevelI,Suite2,140Ch Ph: +61 3 8601 5900. Fax. +61 3 8601 5993 - L. I I l l U ~ ? / r m I I l K ; U l l l . L U l l l ~ ~ .sm~dcorn .com -ABN 73 105 2

wia, Auskalii . . .-.-.. ----