September 21, 2020

Hellenic Voice

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CMA blocks FNZ-GBST merger over competition concerns

The UK’s Competition and Markets Authority (CMA) has provisionally blocked the £150 million merger between...

The UK’s Competition and Markets Authority (CMA) has provisionally blocked the £150 million merger between FNZ and GBST.

FNZ finalised its GBST acquisition in November 2019

Investment technology firm FNZ finalised its £150 million acquisition in November 2019. The move was part of an extensive acquisitive streak in that year.

After the scrutiny the deal had received, the CMA ruled that both companies have a significant presence in the UK, as two leading suppliers of investment solutions.

As a result, it has found that the deal could result in a “substantial lessening” of competition. The CMA is concerned UK consumers could face higher costs and lower quality services.

It argues that the merged company would hold close to 50% of the investment solutions market. FNZ and GBST competed “consistently” against one other in tenders.

A GBST sell-off?

The CMA says a merger between the two would remove that consistent competition.

“Switching retail investment platform solutions is an expensive and complex process,” it writes.

“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 to enter or scale up in the UK.”

The CMA has set out a series of options available to FNZ. These include selling all or part of GBST to third-parties. The watchdog is inviting input on its decisions by 25 August 2020.

“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,” says Martin Coleman, chair of the CMA inquiry group.

“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.”

An FNZ spokesperson told FinTech Futures:  “FNZ notes that the CMA has published the provisional findings of its phase two investigation into the acquisition of GBST. We have no comment at this stage.”

Related: Kleinwort Hambros turns to ERI after cancelled FNZ technology project

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