Mercado Libre accuses Modo of cartelization and anti-competitive practices

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The battle between Mercado Libre and traditional banks Keep adding chapters. Today, the company founded Marcos HalperinThe country’s leading fintech business directory filed a complaint against the financial institutions that own the wallet. Mode To “prohibited concentration”, “cartelization” and “coordinated actions” harm fintech companies.

This is the official complaint that Mercado Libre filed today with the National Commission for the Protection of Competition (CNDC), within the framework of which it targets 36 traditional banks that form a company (Play Digital SA) who is behind Modo, a digital wallet launched in the country in late 2020.

Among other things, Modo is owned by Santander, BBVA, Galicia, Nación, Ciudad, Macro, ICBC and HSBC.among other things (The province is the only one of the great ones that is not part of society.).

According to the company founded by Galperin, the coalition of banks behind the wallet is a “cartel” through which they seek to “avoid competing with each other with their own wallets” to the detriment of users and the fintech industry.

For example, they warn that financial institutions offer discounts and promotions through their payment methods if transactions are made using Modo. “If you have a bank card but do not pay with Modo, You cannot access this discount.“, they illustrate in Mercado Libre.

“It is as if all supermarkets agreed to have a single supermarket brand to market products and carry out joint promotions so as not to compete with each other,” the plaintiff company testified.

Another factor Mercado Libre points out is that Modo’s associated banks provide “open banking” features to their users, but do not provide these tools to users of other digital wallets.

In the complaint, assume that the Modo user has the tools available for example, information about the balances and movements of their bank accounts in the application, but this access is not enabled, so the user has the same functions in other wallets.

“Modo has another goal: to coordinate the commercial distribution channel. to avoid competition among the participating banks,” Mercado Libre said in a statement. They denounce the fact that traditional banks block access to bank account information (except for Modo), which prevents a Mercado Libre user (or other wallets) from grouping the activity of all of them on this platform (bank or other virtual), as can be done with cards (credit and debit).

On the other hand, Mercado Libre’s complaint warns that banks are not complying with current BCRA rules by “setting low and arbitrary limits” on transfers from bank accounts (CBU) to fintech accounts (CVU), in an attempt to limit the outflow of funds from the traditional financial system (savings banks) to digital accounts.

Mercado Libre says this is an “anti-competitive practice” by the firms that own Modo. According to its data, Modo’s 36 subsidiaries manage four out of every five credit cards issued in the country, 81% of the financial system’s deposits and 86% of Argentina’s savings banks.

Mercado Libre’s complaint comes several months after a counter-complaint that is ongoing National Commission for the Defense of Competition (CNDC). This is the proposal that the banks that own Modo submitted to this body in April, a five-point motion in which they say Mercado Pago is engaging in anti-competitive practices. In other words, they accuse it of blocking or preventing other players from competing with its services.

One of the topics was related to QR code compatibility, Central Bank Regulation (BCRA) that states that all QR codes must allow credit card payments from any wallet, regardless of which company provides those QRs. After months of debate, this has finally been implemented under the current BCRA QR interoperability regulation.

In turn, Modo denounced that since it is a company that is a major player in the wallet segment and the QR network, it would be a case of “vertical integration” that would block competition.

The banking sector admits that they have already filed a complaint, although they rejected the questions asked. “Cartelization requires a dominant position, and this is not the case. It is clear that Mercado Libre is not interested in consumers, but in being the only one, and that the market is not free,” one of the country’s major financial institutions said unofficially.

“The complaint has no head or tail. We do not see any harm to consumers from conducting promotions on Modo. Banks compete with each other, even if Modo exists,” they explained.

After the complaint, NATION Modo was contacted. “We are working on this issue,” was the firm’s response.

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