The U.S. Department of Justice decided not to request additional information in its review of the planned acquisition of PayPal by eBay and let its investigation expire. According to rules set out by the Hart-Scott-Rodino Act, the Justice Department had 30 days to evaluate the proposed acquisition and decide whether it would investigate further. The waiting period expired yesterday, clearing the way for eBay to acquire PayPal by the end of the year.

Leading online auction service eBay, with over 46 million registered users, announced in July that it would acquire PayPal, the number one payment service on the Internet with over 17 million registered users. eBay has its own online payment service, Billpoint, which it said it would eliminate after the acquisition. Analysts had believed that the Justice Department would investigate further and would possibly recommend that eBay spin off Billpoint to maintain the current competitive conditions.

The Justice Department reviews paperwork submitted by the companies to determine whether consumers would have an alternate service to use should a newly acquired company raise its prices. As recently as June, PayPal had been complaining to the Department about alleged anti-competitive practices at eBay. Analysts felt that the filing may have contained documents that indicated that PayPal viewed Billpoint as its main competition, which would undermine the companies' current claims that they compete in a broader payment market. eBay users spent $3.1 billion in the first quarter of 2002, with 60% - 70% of listings offering the PayPal service.

Regulators may have been able to make a quicker decision than most merger cases since it had already investigated eBay, according to one analyst. The Justice Department has investigated eBay previously in connection with Bidder's Edge and PayPal's own complaints. The only development that might now hold things up is if auction users felt the acquisition would hurt them and banded together to file an antitrust lawsuit.