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FNZ hits back at watchdog over GBST merger ban

FNZ hits back at watchdog over GBST merger ban
 Credits: Bloomberg

Platform technology company FNZ has doubled down on its dispute with the competition watchdog, maintaining its stance that the regulator has a poor understanding of the platform market.

In its response to the Competition and Markets Authority, published this afternoon (August 26), FNZ said it “strongly disagreed” with the watchdog’s provisional conclusion that its takeover of rival GBST would result in a substantial lessening of competition in the retail platform market.

FNZ argued the CMA’s proposed view of the market GBST and FNZ worked in was “artificially narrow” and “entirely at odds” with evidence it had supplied.

In its probe, the CMA had distinguished between retail and non-retail platforms, and considered FNZ and GBST’s main clients to be retail platforms.

Therefore when studying the market in which FNZ and GBST worked, the competition watchdog only looked at other software providers in the retail platform space, which, FNZ argued, had eliminated a lot of real life competition on paper.

In today’s update, FNZ went on to argue that even with the CMA’s own understanding of the market the two companies were “not close competitors”, claiming that out of market constraints had not been adequately assessed.

The tech firm also said the CMA’s proposed solution — which included the sale of GBST post merger — would be “entirely unreasonable and disproportionate”.

It said: “Less onerous remedies are available that would be fully effective in addressing the substantial lessening of competition.

“It would [also] impose significant costs on FNZ and on the merged entity’s customers in Australia when the CMA’s findings relate solely to the UK wealth management retail platform solutions market.”

FNZ’s update comes three weeks after the CMA provisionally blocked the merger with GBST, saying the move could leave consumers facing “higher costs and lower quality services” from their investment platforms.

The two firms agreed a merger worth £220m last summer but the watchdog started investigating the agreement in November 2019.

In March it referred the deal for a “phase two” investigation and pushed forward with its probe, arguing FNZ was already in a strong position in a market with limited external constraints.

FNZ has consistently branded the CMA’s view of the platform space as “outdated” and “excessively narrow and artificial”, but the watchdog went ahead with the ban earlier this month.

imogen.tew@ft.com

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