The Australian Competition and Consumer Commission is not quite feelin' eBay's plans to go PayPal-only in Australia, and has issued a draft notice rejecting the proposal. The ACCC said that eBay's proposed conduct might allow the company to abuse its power and ultimately eliminate competition in the market where PayPal operates. eBay now needs to submit a response to the ACCC if it wants to move ahead with its plans.

Last month, eBay announced that it would require all payments made through the popular auction site in Australia to be done through PayPal beginning June 17. Both users and financial institutions were up in arms over the decision, saying that it would reduce competition and force users to either agree to the new terms or leave the market altogether. eBay responded by saying that going PayPal-only will make transactions safer, and that users are free to go elsewhere (you know, the thousands of other, popular online auction sites) if they don't want to use PayPal.

A long list of individuals and organizations then submitted their concerns to the ACCC, including (allegedly) Google, which runs PayPal competitor Google Checkout. Many of the submissions argued that eBay's entire goal was to substantially lessen competition. "eBay's proposed conduct will result in significant public detriments including a reduction in consumer choice and a reduction in the overall quality of online payment processing services in Australia," read the 38-page complaint that was linked to Google.

It turns out that the ACCC agrees with those concerns. "PayPal currently competes with a range of other providers to supply online payment services to users of online marketplaces. If the notified conduct is allowed to go ahead, there will be no competition for the supply of such services to buyers and sellers using eBay," ACCC chairman Graeme Samuel said today in a statement. "Given eBay's position as Australia's leading online marketplace, the notified conduct will substantially reduce competition to supply online payment services to users of online marketplaces more generally."

The organization acknowledged that there may be some benefits to going PayPal-only, such as increased buyer protection insurance. Still, the benefits apparently don't outweigh the negative effects. "[T]he ACCC believes that consumers are in the best position to decide which payment method is most suitable for them," Samuel said. He is now asking eBay to delay implementation of the PayPal-only measures until a final decision is made by the ACCC.