(Bloomberg) — MercadoLibre Inc. on Monday accused Argentine banks of “illegal concentration” in one payments platform in an anticompetitive tactic against its fintech unit.
Most read articles on Bloomberg
The company, Latin America’s largest by market capitalization, filed the lawsuit with Argentina’s National Competitive Defense Commission after the bank filed its own lawsuit in May through a common platform, MODO, alleging similar anti-competitive tactics by its Mercado Pago unit.
Mercado Pago claims that 80 percent of all deposits in Argentina’s financial system are held by the 36 banks backed by MODO, while banks say it accounts for 80 percent of all e-commerce retail sales in South America’s second-largest country.
“The 36 banks participating in MODO Wallet have formed a cartel to avoid competition between their digital wallets,” MercadoLibre said in a statement on Monday, accusing the banks of “coordinated conduct that will harm the fintech industry and its users.”
It’s the latest sign of tensions between fast-growing fintech platforms and traditional banks as a once-cash-driven economy shifts rapidly to digital transactions.
A similar legal battle unfolded in 2018 over Prisma, a bank-backed platform that was eventually acquired outright by Boston-based private equity firm Advent International. More recently, banks have accused Mercado Pago of stifling competition by making it impossible to freely manipulate retailer QR codes across apps.
MODO, which was founded in 2020, responded to MercadoLibre’s lawsuit late on Monday, denying its accusations that the two banks unfairly colluded to lure users with discounts and other promotions.
“Instead of improving their promotions, MercadoLibre is using their complaints to block our promotions and avoid competition that offers better benefits to users,” Santiago Erazo Lomakis, MODO’s director of legal, compliance and public affairs, said in a statement. “MercadoLibre intends to continue abusing its dominant position by shutting down our market with these complaints.”
Founded in 1999, MercadoLibre is currently the most valuable publicly traded company in Latin America with a market capitalization of $101.4 billion. What started out solely as an e-commerce platform has since grown to include payments and financial services, which account for over 40% of revenue.
MercadoLibre said its fight against Argentine banking platform MODO differs from its competition with Zelle, a money transfer platform backed by U.S. fintech platforms and Wall Street banks, in that Zelle focuses on person-to-person transfers, a service that banking apps already offer.
“MODO is not doing the same thing. You don’t need MODO to send money in Argentina,” MercadoLibre added in a statement. “MODO has a different goal: to coordinate commercial distribution channels to avoid competition.”
–With assistance from Ignacio Olivera Doll.
(Updated with MODO response in seventh paragraph.)
Most read articles on Bloomberg Businessweek
©2024 Bloomberg LP
