The Competition and Markets Authority (CMA) has not been convinced that the uniting of fintech firms FNZ and GBST would be good for the industry.
On 5 November, following an in-depth investigation, it concluded that “the loss of competition brought about by the deal could lead to investment platforms, and therefore UK consumers who rely on these platforms for administer their pensions and other investments, facing higher costs and lower quality services”.
The CMA added that the findings were based on data and internal documents supplied by FNZ and GBST, as well as “extensive information provided by a wide variety of customers, competitors and other stakeholders”.
The watchdog said it took into consideration “a number of remedies” but ultimately concluded that “requiring FNZ to sell the entire GBST business is the only solution”.
When contacted by International Adviser, a spokesperson for FNZ said: “We note that the CMA has published its final views on FNZ’s 2019 acquisition of Australian software company, GBST.
“We have no further comment at this stage.”
The acquisition was inked in July 2019 and saw FNZ buy 100% of the shares of its rival.
But the competition watchdog intervened in March 2020 to express concerns about how the deal would affect the market.
The merger of the firms was blocked by the CMA in early August; with FNZ clapping back later that month, arguing that the CMA’s claims regarding a lack of competition come from its “narrow” view of the retail market, which is “at odds” with the evidence.
‘Perfectly entitled to do…’
Martin Coleman, who headed up the CMA inquiry group carrying out the investigation, commented: “We have found that FNZ and GBST are two of the leading suppliers of retail investment platform solutions, and that they compete with each other closely and face few other suppliers of similar standing.
“The merge has substantially reduced competition in this sector.
“This matters to the millions of UK consumers who hold pensions or other investments. This is because competition plays a key role in driving price and quality.
“Without healthy competition, costs could go up and service quality could get worse.”
Coleman concluded: “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 see off all of the business it had just acquired.”