The UK Competition and Markets Authority (CMA) today issued its final report into the merger of FNZ and GBST. The regulator has found that the deal raises significant competition concerns in the supply of retail platform solutions to investment platforms in the UK, where FNZ and GBST are two of the leading suppliers.

The merged business would be by far the largest supplier, holding almost half of the UK market.

Following an in-depth Phase 2 investigation, a group of independent CMA panel members concluded that the loss of competition resulting from the deal could lead to investment platforms, and therefore UK consumers who rely on these platforms to administer their pensions and other investments, facing higher costs and lower quality services.

Although there are differences in the business model that the two companies use, with FNZ providing an integrated software and servicing solution and GBST being a software-only provider, the CMA has found that they compete closely and face few other significant suppliers at present. The CMA found no basis to suggest that entry or expansion by other suppliers would mitigate the harm caused by the merger.

The regulator carefully considered a number of remedies, including options suggested by FNZ. The CMA found that requiring FNZ to sell the entire GBST business is the only solution that will properly address the loss of competition resulting from the merger.

Martin Coleman, Chair of the CMA inquiry group carrying out the investigation, said:

“FNZ chose to complete its acquisition of GBST without first seeking merger clearance in the UK, which it is perfectly entitled to do. This came with the risk that the CMA could call the case in for investigation and that, if competition concerns were found, FNZ could be required to sell off all of the business it had just acquired.”