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German cartel office initiates proceedings against PayPal

Photo illustration of a PayPal logo

BERLIN (Reuters) - Germany's cartel office regulator said on Monday it had initiated proceedings against payment company PayPal Europe over the possibility that it hindered competition.

The subject of the proceedings was PayPal's rules for extra charges and the presentation of PayPal in the terms of use for Germany, the watchdog said. PayPal did not immediately reply to a request for comment.

The regulator is investigating in particular rules that say merchants may not offer their goods and services at a lower price to customers who choose a cheaper payment method than PayPal.

PayPal demands that sellers do not express a preference for other payment methods or make their use more convenient for customers, according to the antitrust watchdog.

"These clauses could restrict competition and constitute a violation of the prohibition of abuse," said cartel office chief Andreas Mundt in a statement.

"We will now examine what market power PayPal has and to what extent online merchants are dependent on offering PayPal as a payment method."

The watchdog is closely watching internet companies to ensure fair competition.

Changes to Germany's antitrust laws for digital corporations, which came into effect in 2021, give the cartel office more power in identifying and prohibiting some companies' dominant positions.

The authority has previously initiated proceedings against Amazon and Facebook.

(Reporting by Kirsti Knolle, Matthias Inverardi; Editing by Matthias Williams and Jan Harvey)