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Paymark wins bid to keep some secrets from rival

By Victoria Young

Aug. 23 (BusinessDesk) - A High Court judge has ruled against an attempt by the founder of locally owned Payment Express, Andy Cullen, to peruse confidential documents relating to its competitor, French-owned Paymark's pricing and strategy as part of a “hard-fought” proceeding over anti-competitive tactics.

The fight between Auckland headquartered Payment Express and Paymark was brought by the Kiwi company over anti-competitiveness.

Payment Express provides hardware and services such as eftpos machines, while Paymark owns the transaction system which moves money between the banks when eftpos is used.

This means that Payment Express needs to use Paymark’s network if it wants to provide eftpos services, although it can provide other transactions such as credit card or smartphone payments without it.

According to the judgment of Justice Ian Gault, Payment Express alleges Paymark is being anti-competitive by requiring customers to buy bundled services even if they only want eftpos.

Paymark denies these allegations, saying that it doesn’t have substantial market power and pointing to the Commerce Commission decision which cleared Paymark’s sale to its French parent, Ingenico.

Paymark had previously been owned by the major Kiwi banks.

The competition regulator said in its decision on the Paymark sale that there appeared to be little demand for bundling, so competition would not be impacted.

The court dispute, which Justice Gault described as “hard-fought - reflecting that the parties are vigorous competitors,” has yet to make it to trial.

However, in July this year, the High Court at Auckland was asked to rule on discovery.

Payment Express’s lawyer Nick Flanagan told the court that Paymark’s confidentiality restrictions were more than 90 percent of the documents his client sought.

The court was asked to rule on whether disclosure to Payment Express provided a real risk of prejudice to Paymark, and whether Payment Express’s founder and ultimate shareholder, Cullen, could see his competitor’s documents.

While it was common ground that Cullen would abide by confidentiality obligations if he saw Paymark’s documents, his rival argued that once he had seen the documents, which included pricing and strategy, he would not be able to separate that information from his business dealings.

Cullen’s lawyer said that the discovery must be analysed by the Payment Express founder and not just his lawyers because he is the expert.

However, the judge disagreed.

“I consider that Payment Express’ right to inspection of the confidential (parts of) documents to prepare and present its case does not outweigh the harm to Paymark of the disclosure of material helpful to a competitor,” the judge ruled in a decision dated Aug. 16. After making this finding, the judge left it up to the parties to work out discovery.



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