Sabol

BACKGROUND

16 PayPal is the dominant eCommerce payments platform in the United States, handling 17 billions of transactions annually. (CAC ¶ 22.) To accept PayPal, eCommerce merchants in the 18 United States enter form contracts with PayPal that prohibit offering price discounts when 19 consumers use non-PayPal means of payment. (Id. ¶ 3.) Framed as a prohibition on 20 “surcharges,” PayPal’s anti-discrimination (“ADP”) provisions forbid any PayPal-accepting 21 merchant from offering discounts on goods purchased with non-PayPal means of payment. (Id. ¶¶ 22 33–36.) The rules state that merchants shall not impose “a surcharge or any other fee for 23 accepting PayPal as a payment method” and that any fees charged on PayPal transactions may not 24 be higher than fees charged “for non-PayPal transactions.” (Id. ¶ 34.) Under these provisions, 25 merchants cannot “steer” consumers to more cost-effective payment methods other than Paypal by 26 offering discounts to Paypal’s rivals. Any such attempt would be treated as a “surcharge” on 27 1 Plaintiffs allege that PayPal’s ADPs generate higher eCommerce prices along with other anticompetitive effects. Without these…