Regulator signals no deal on eBay plan

Australia was the first place where eBay was planning the PayPal-only system, though the company often tests big changes in smaller markets before expanding them worldwide.

The plan angered some users who said using PayPal would cost them more than other payment methods such as bank transfers, and that eBay was just interested in increasing revenue for PayPal, which it owns.

The government's fair-trading regulator the Australian Competition and Consumer Commission opened an investigation into the plan and considered submissions from Australian banks and users of the online auction site claiming the restrictions were unfair.

"The ACCC is concerned that the notified conduct will allow eBay to use its market power in the supply of online marketplaces to substantially lessen competition in the market in which PayPal operates," Chairman Graeme Samuel said in a statement Thursday.

Acknowledging one of eBay's main arguments for the change, Samuel said plan had "the potential to deliver some benefits to users such as increased buyer protection insurance in certain circumstances."

"However, the ACCC believes that consumers are in the best position to decide which payment method is most suitable for them," he said.

EBay said it will delay the removal of non-PayPal methods from its Australian site until July 15--a postponement of almost one month from the June 17 planned start date--and will again try to convince the regulator to let it go ahead.

"EBay believes the consumer benefits of this initiative are worth fighting for on behalf of its buyers which will ultimately benefit sellers," the company said in a statement.

EBay Inc., based in San Jose, Calif., said says it wants to reduce disputes and restore trust in its marketplace with the PayPal-only plan. Because eBay and PayPal can share information on each transaction, eBay says use of PayPal allows it to stop fraud more efficiently than outside payment services.