FNZ purchased GBST in November 2019. Both companies have
a significant presence in the UK. They are 2 of the
leading suppliers of retail investment platform solutions
in the UK.
Following its in-depth ‘Phase 2’ investigation, the
Competition and Markets Authority (CMA) has provisionally
found that FNZ’s purchase of GBST could result in a
substantial lessening of competition. This could lead to
UK consumers who rely on investment platforms to
administer their pensions and other investments facing
higher costs and lower quality services.
The merged business would be by far the largest supplier
in the UK, holding close to 50% of the market. Although
there are differences in the business model that the 2
companies use, with FNZ providing an integrated software
and servicing solution and GBST being a software-only
provider, the CMA provisionally considers that they
compete closely in a concentrated market in which there
are few other significant suppliers. In particular, the
CMA’s investigation found that FNZ and GBST have competed
consistently against each other in recent tenders to
supply major investment platforms in the UK and that
customers view them as close alternatives.
The investigation provisionally found that the merged
business would face limited competition, with only one
other supplier (Bravura) offering similar capabilities.
Switching retail investment platform solutions is an
expensive and complex process. The reluctance of
customers to change suppliers, as a result of the risks
involved, can make it difficult for smaller or less
well-established firms (including suppliers active
outside the UK) to enter or scale up in the UK.
In reaching this provisional decision, the CMA analysed a
wide range of evidence looking at how closely these firms
compete, including tender data and the companies’
internal documents. It also engaged with customers,
competitors, and other stakeholders to inform its
findings.
The CMA has set out potential options for addressing its
provisional concerns, which include requiring FNZ to sell
all or part of GBST. Views are invited on the provisional
findings by 25 August 2020 and on the notice of possible
remedies by 18 August 2020.
Martin Coleman, Chair of the CMA inquiry group, said:
“The evidence we’ve seen so far consistently points in
the same direction – that FNZ and GBST are two of the
leading suppliers within this market and compete closely
against each other. That’s why we’re concerned that their
merger could lead to investment platforms, and therefore
indirectly millions of UK consumers who hold pensions or
other investments, facing higher fees and lower quality
services. We’re now inviting comments on our provisional
findings and possible remedies.”
For more information, visit the FNZ/GBST merger inquiry
case page.
