UK Competition Regulator to Require FNZ to Sell the Entire GBST Business

The United Kingdom's Competition and Markets Authority (CMA) published on Thursday its final report on the merger of FNZ and GBST, 2 leading suppliers of retail platform solutions to investment platforms in the UK, following an in-depth Phase 2 investigation.

The report concludes that the deal raises significant competition concerns in the UK market of retail platform solutions, as the merged business would be by far the largest supplier, holding almost half of the UK market.

A group of independent CMA panel members explained that the loss of competition brought about by the deal could lead to investment platforms, and therefore UK consumers who rely on these platforms to administer their pensions and other investments, facing higher costs and lower quality services.

In reaching this decision, the CMA analysed a wide range of evidence looking at how closely the 2 businesses compete in today's marketplace. The CMA's findings are based on the companies' own tender data and internal documents, as well as extensive information provided by a wide variety of customers, competitors and other stakeholders.

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 UK competition watchdog has found that they compete closely and face few other significant suppliers at present. Looking at how the sector is expected to develop in future, the watchdog found no basis to suggest that entry or expansion by other suppliers would mitigate the harm caused by the merger.

After considering a number of remedies, including options put forward by FNZ, the CMA found that requiring FNZ to sell the entire GBST business is the only solution that will properly address the loss of competition resulting from the merger because of the risk that the other, less extensive, remedies put forward would have been ineffective in practice.