The UK’s Competition and Markets Authority (CMA) has blocked the merger of wealth technology providers FNZ and GBST, saying that the deal could erode the quality of service and lead to higher prices.
The decision comes following an in-depth probe, which led the regulator to concede that the deal poses vital competition concerns in a concentrated market, where the firms are among the top suppliers.
According to the regulator, the deal would create competition concerns in the supply of retail platform solutions to UK investment platforms.
The loss of competition resulting from the deal would adversely affect investment platforms and in turn, UK consumers leveraging these platforms, deduced CMA.
The regulator also observed that the combined business would be the largest supplier in the UK, holding around 50% of the market.
To address the problem, the CMA has directed FNZ to sell the entire GBST business.
The regulator said that it considered ‘a number of remedies’ before arriving at the decision but found no solution that will properly address the competition concerns.
FNZ, which offers an integrated software and servicing solution, agreed to buy Australia-based GBST in July last year. The deal was concluded last November.
The two firms have varied business models, with GBST being a software-only business.
Despite this, in August this year, the merger was provisionally blocked by CMA citing substantial lessening of competition.
CMA inquiry group chair Martin Coleman noted: “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 merger has substantially reduced competition in this sector.”