New York will let Western Union buy Intermex if it holds its remittance fees to six countries at the rate of inflation for three years, and on the same day California pulled its approval back
Six countries. That is the whole of the deal.
The New York Attorney General has accepted an Assurance of Discontinuance from The Western Union Company and from Intermex Wire Transfer II, allowing Western Union's purchase of International Money Express to proceed on terms that bind the buyer for three years after it closes. The Antitrust Bureau's finding is stated in a single paragraph: post-merger, on the data available to the office, Western Union would hold more than 30 percent of retail remittance services from New York to Ecuador, Guatemala, Honduras, Mexico, Nicaragua and Peru.
Every remedy in the document points at those six.
The market the office drew
The Assurance defines a relevant product market as retail remittance services to one particular country, with New York State as the geography. Both halves of that are doing work.
Digital services were held not to be a close substitute for retail, because a digital transfer requires an account and a credit or debit card, and the document names the unbanked population as the customers for whom that matters most. Remittances to other countries were held not to be substitutes either, on the ground that money is sent to a specified recipient who cannot travel somewhere else to collect it. Draw the market that way and a company with agents in a corner shop in the Bronx is not competing with a phone app or with the same firm's business to Poland. It is competing for the person in front of the counter.
The parties neither admit nor deny the findings, and the company's filing states the Assurance was entered into for settlement purposes only.
The cap is an index, not a number
For three years from closing, Western Union may not raise the average retail remittance fee it charges per principal amount band to those six countries by more than the increase in the unadjusted Consumer Price Index for All Urban Consumers over the same twelve months.
The mechanics are unusually specific. Below $1,000 the average is computed for each destination country in $100 bands. Above $1,000 it becomes a yield, total fees collected divided by total principal, expressed as a percentage. Strategic Account locations and everything else are measured separately, so a rise at the supermarket cannot be offset by a fall somewhere else.
One subparagraph closes the obvious door. Western Union may not set the exchange rate in a way that undermines the price control or discriminates against the counter in favour of the app.
A floor drawn ZIP code by ZIP code
The location commitment is not a statewide total. In each New York ZIP code, Western Union must keep at least as many retail locations as the greater of what it or Intermex had there before the deal closed.
Eight retail partners are named in a footnote as Strategic Accounts: Ahold, King Kullen Grocery, Kinney Drugs, Price Chopper, R&L Management, Tops Markets, Walgreen and Walmart. If one of those partnerships ends across the whole state, or a partner shuts a shop of its own accord, the affected locations drop out of the count, subject to commercially reasonable efforts to keep them.
There is also a standstill. For three years Western Union cannot take 10 percent or more of any New York licensed money transmitter that earns more than half its revenue from remittances without the Department of Financial Services approving first.
Not Ernst & Young
Compliance is audited, and the Assurance names the auditor by exclusion. Western Union must engage one of the Big Four other than Ernst & Young, subject to approval by the Department, starting a year after closing and finishing within six months of that. The Department approves the scope, can require the auditor to report to it directly, and can demand the work papers.
Evidence of a violation is prima facie proof of a violation of law under Executive Law 63(15).
California went the other way on the same day
On 13 August, the day the Assurance was signed, the California Department of Financial Protection and Innovation wrote to Western Union and to IMXI suspending the approval extension it had granted on 31 July.
The company reproduces the reason in its filing. The suspension is based on a need to further review the transaction as a result of the intervening six months since approval was originally granted, and to further examine the impact of the proposal on operations in that state. Western Union says it intends to engage promptly with the department and to close once the approval is reinstated. The letter itself is not public and was not read here.
What the press release left out
Two documents describe 13 August, and they do not describe the same day.
The joint press release, attached to the filing as an exhibit, says the parties received regulatory approval from the Department of Financial Services and that Western Union made certain commitments with respect to remittance services and locations in New York. The words Attorney General, Assurance and antitrust do not appear in it anywhere.
The filing itself, where the company speaks in its own voice, opens item 8.01 by naming the Assurance, the Attorney General and the competition review that produced it. Both accounts are true. Only one of them says a state antitrust authority had been investigating the deal.
