Western Union is under fire from the European Union’s antitrust regulators over allegations of collusion in order to drive away competition. The former “king” of money transfers is said to be cooperating.
Paypal, Moneywise, Square and Facebook to name but a few, have shaken Western Union’s stranglehold in the populated money transfer market, a market that is constantly growing in both providers and customers.
According to Bloomberg, Western Union is now under investigation by the European Commission. According to unnamed sources, Western Union has breached competition rules by forging exclusivity contracts with retail outlets in order to drive out these smaller rivals.
In early 2015, the World Bank forecast a 0.4% rise in global money transfers to $586 billion in 2015. The World banks has suggested that 2016 will see a 4.1% growth in money transfers to $610 billion in 2016.
It is not only claims of collusion that are being investigated, but accusations that banks in Europe have agreed upon the closure of similar, smaller money-transfer providers due to fears that money being sent was linked with terrorism or drug-trafficking. These are not unfounded fears, however, since the high profile multi-billion dollar fines for money-laundering charges against well renowned banks such as HSBC in 2012 ($1.9 billion) and JP Morgan Chase & Co. in 2014 ($1.7 billion).
Western Union’s cooperation
A spokesperson for the Commission has revealed that Western Union is cooperating with their investigations, and has complied with requests for information regarding their business activity in Europe.
Western Union is “cooperating with the European Commission following a request for information on the company’s business in Europe,” the Englewood, Colorado-based company said in a statement. It’s “fully supportive of improving understanding of the money transfer sector within a broader competitive framework.”
This isn’t the first time that Western Union have been placed under the microscope by antitrust regulators. A decade ago, U.S antitrust officials examined the money-transfer provider’s activity as similar accusations of collusion with retail agents were made. However, with no findings of any criminal action the probe fizzled out in under a year.
Following news of the probe by the European Commission, Western Union shares dropped sharply in afternoon trading closing at $17.95 for a loss of $0.41 or 2.23%.