The Competition and Markets Authority (CMA) is concerned that the
loss of competition brought about by the merger could result in
UK investors losing out as a result of higher prices, fewer
options and less innovation.
FNZ purchased GBST in November 2019. Both companies have a
significant presence in the UK. They are 2 of the leading
suppliers of solutions involving software and/or servicing to
retail investment platforms in the UK.
After completing its initial Phase 1 investigation, the CMA found
that FNZ and GBST are close competitors in what is a concentrated
market with few other significant suppliers. Smaller or less
well-established firms find it difficult to enter or scale up
because of the risks and reluctance of customers to change
suppliers.
As part of its investigation, the CMA undertook extensive market
testing and looked at evidence from a number of third-party
stakeholders including investment platforms, external
consultants, competitors and industry bodies. It also examined
the companies’ internal documents and assessed the extent of
competition in recent tenders in this sector.
Joel Bamford, Senior Director of Mergers at the CMA, said:
Investment software is critical to the operation of retail
investment platforms which are used by many investors in the
UK.
FNZ is already the largest supplier and has purchased an
established rival who is trusted by many platforms, with few
remaining competitors left in the market. We are therefore
concerned that this transaction could lead to customers losing
out.
FNZ must now address the CMA’s concerns within 5 working days. If
it is unable to do so, the deal will be referred for an in-depth
(Phase 2) investigation.
For more information, visit the case page.
