(News Bulletin 247) – The Competition Authority has issued an opinion to the government in which it considers that capping these commissions does not constitute the “most appropriate” response. Edenred shares rose significantly on the Paris Stock Exchange in reaction to this information. But the measure could be taken by Bercy by the end of the year.

A sword of Damocles that hung over the meal voucher market as well as over Edenred shares (and to a lesser extent that of Sodexo) seems to be evaporating.

Two weeks ago, the group specializing in payment solutions in the world of work was battered on the stock market, after Olivia Grégoire, Minister Delegate in charge of SMEs, craft trade, and tourism, had threatened to establish a cap on commissions received by issuers of meal vouchers (Edenred, Sodexo but also Up and Swile).

The minister indicated that the execution of this threat would depend on the content of a report requested by her services from the Competition Authority. These commissions “are between 3% and 5%, I am waiting to see very precisely what the Competition Authority says, but if there is a malfunction, we will cap them at the floor rather than at the ceiling,” explained the minister. Edenred shares then lost nearly 11% over one session.

A cap is not a panacea

The Competition Authority submitted its report this Tuesday, October 17. “If the question of the establishment of a price cap can legitimately be asked insofar as it can constitute a response to the failures of certain two-sided markets, it does not constitute in this case the most appropriate response in that it would not correct the dysfunctions observed in the meal voucher market and would lead to uncertain effects,” explains the Authority in this opinion. She even believes that such a measure would be likely to generate “counterproductive effects”.

“Experience shows that generally a ‘ceiling’ becomes in practice a ‘focal point’, that is to say a price towards which the prices charged by the companies concerned converge. Thus, any issuer whose acceptance commission rates were usually set below such a regulatory ceiling will tend to align its prices with this ceiling, to the detriment of the consumers concerned,” explains the Authority.

“Moreover, issuers could seek to compensate for the loss incurred, either by circumventing the regulation (increase in their acceptance margins on services whose prices would remain free), or by increasing their emission prices (compensation effect), with ultimately a risk of a drop in demand for meal vouchers,” she continues.

“Moreover, the definition of the level of this ceiling, as well as the control of its effectiveness, raise delicate questions of implementation,” also considers the Competition Authority.

She recommends other measures to the government, such as “adapted regulation of the meal voucher market, in particular by the establishment of approval of issuers and exhaustive advertising of approved companies”. Another avenue mentioned by the Authority: “the search for a structural solution aimed at rebalancing the balance of power on the market by putting an end to the monopoly exercised by each issuer on its securities vis-à-vis traders so that the latter can have real negotiating power.

Unwinding of ‘short’ investors

As a result, the government could avoid introducing a cap, at least immediately. Contacted, Bercy nevertheless explained to News Bulletin 247 that a consultation will take place with players in the sector by the end of the month. A reform of the meal voucher market must be implemented by the end of the year, indicates this same source. And until then “all options are on the table”, indicates Bercy, including a capping. This cap could serve as a transitional measure until the meal voucher market is completely dematerialized, i.e. in 2025-2026. Especially since according to Bercy, the Competition Authority explained that this measure was legally possible.

For now the market seems to be breathing a sigh of relief. Around 10:10 a.m., Edenred shares rose 4.8%, the largest increase in the CAC 40, after opening up more than 6.5%.

“Funds had taken ‘short’ positions (to speculate on a fall in the stock, Editor’s note) and now find themselves obliged to undo their position (by repurchasing the action, Editor’s note) following the report from the Authority of competition,” explains a financial analyst.

“However, I think that if they won a battle they did not win the war,” he continues. Because measures to strengthen competition could be taken.

The CEO of Edenred, Bertrand Dumazy nevertheless tends to regularly emphasize that his group likes competition. “Long live competition!”, he declared, for example, about the emergence of the fintech Swile, which for a time worried investors.

Remember that Edendred’s general manager for France, Ilan Ouanounou, declared on BFM Business that capping restaurant voucher commissions made “no sense” because these commissions “are very reasonable”. The manager also judged that the meal voucher market was “perfectly competitive” with 13 issuers including five large ones. “How many markets contain five big emitters in France?” he exclaimed.