The Australian Competition and Consumer Commission has denied requests from the Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank, and Bendigo and Adelaide Bank to collectively bargain with Apple for access to Apple Pay.
The ACCC already denied the Australian banks an interim authorisation to jointly negotiate with Apple over its mobile payments platform in August 2016.
The decision does not come as a total surprise, as it was revealed in November 2016 that ACCC had issued a draft determination proposing to deny collective bargaining authorisation to the banks involved.
ACCC chairman Rod Sims said: "The ACCC is not satisfied, on balance, that the likely benefits from the proposed conduct outweigh the likely detriments. We are concerned that the proposed conduct is likely to reduce or distort competition in a number of markets.
"While the ACCC accepts that the opportunity for the banks to collectively negotiate and boycott would place them in a better bargaining position with Apple, the benefits would be outweighed by detriments," Sims said.
The ACCC accepted that giving banks access to the iPhone near-field communications (NFC) controller would likely increase competition in mobile payment services and that this was a significant public benefit. However, the ACCC considered the "likely distortions to and reductions in competition caused by the conduct would also be significant".
The ACCC identified three negative impacts a different decision could cause.
"First, Apple and Android compete for consumers providing distinct business models. If the Applicants are successful in obtaining NFC access, this would affect Apple’s current integrated hardware-software strategy for mobile payments and operating systems more generally, thereby impacting how Apple competes with Google," Sims said.
"Second, digital wallets and mobile payments are in their infancy and subject to rapid change. In Australia, consumers are used to making tap and go payments with payment cards, which provide a very quick and convenient way to pay," according to Sims, at this point it is uncertain how competition may develop.
"Access to the NFC in iPhones for the banks could artificially direct the development of emerging markets to the use of the NFC controller in smartphones. This is likely to hamper the innovations that are currently occurring around different devices and technologies for mobile payments," he added.
Sims said that Apple Wallet and other multi-issuer digital wallets could increase competition between the banks by making it easier for consumers to switch between card providers and limiting any ‘lock in’ effect bank digital wallets may cause.
The ACCC consulted with consumers, financial institutions, retailers and technology companies in reaching its decision.
The banks were disappointed with the ACCC decision.
Lance Blockley, payments specialist and spokesperson on behalf of the banks, said: "Whilst we thank the ACCC for their time and diligence in reviewing our application, and recognising both the imbalance in negotiating positions and that there were real issues for consideration, we are disappointed that the finely balanced draft determination was not tipped in the final decision, given our considerable effort to demonstrate the public benefits inherent in open NFC access, and the subsequent flow on benefits for mobile wallet innovation and competition in Australia.
"Apple has a stated desire to own the entire mobile wallet, and will use the beachhead into mobile wallets afforded to them by complete control over mobile payments on iPhone to exert control over the rest of the digital wallet. This in our view is aimed at increasing the services revenue they can earn from iPhone users," Blockley added.