UK competition watchdog to reconsider stance on FNZ/GBST merger
After axing the FNZ/GBST merger in November, the UK Competition and Markets Authority (CMA) appears to have changed its approach. According to an update on its website, the CMA will be reconsidering the case.
The reason for the change is that FNZ has submitted a Notice of Application to challenge the CMA’s final decision in this case to the Competition Appeal Tribunal (CAT). Following receipt of the Notice of Application, the CMA identified certain potential errors in its market share calculations as a result of the provision of inconsistent information during the course of the CMA’s investigation.
The CMA will now ask the CAT to send the case back to the CMA to reconsider.
As FX News Group has reported, in November 2020, the CMA issued its final report into the merger of FNZ and GBST. The regulator found that the deal raises significant competition concerns in the supply of retail platform solutions to investment platforms in the UK.
The merged business would be by far the largest supplier, holding almost half of the UK market, the regulator said back then.
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.