Watchdog orders FNZ to sell GBST due to competition concerns

Watchdog orders FNZ to sell GBST due to competition concerns

The competition watchdog has blocked the merger of two major platform technology companies, concluding the move would see customers using investment platforms face “higher costs and lower quality services”.

Following an in-depth phase two investigation, the Competitions and Markets Authority announced today (November 5) it had ordered FNZ to sell GBST after finding their completed merger would lead to a loss of competition in the platform technology market.

The CMA said the deal raised “significant competition concerns” in the UK, where FNZ and GBST were two of the leading suppliers and the combined entity would hold almost half of the market.

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Martin Coleman, chairman of the CMA inquiry group carrying out the investigation, said: “This matters to the millions of UK consumers who hold pensions or other investments.

“This is because competition plays a key role in driving price and quality. Without healthy competition, costs could go up and service quality could get worse.”

FNZ and GBST — two of the three major tech providers for UK adviser platforms — 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FNZ has consistently branded the CMA’s view of the platform space as “outdated” and “excessively narrow and artificial”, but the watchdog went ahead with a provisional ban in August this year.

The CMA said it had “carefully considered” a number of remedies to the loss of competition, including options but forward by FNZ, but had ruled that requiring FNZ to sell the entire GBST business was the “only solution”.

Mr Coleman said: “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.”

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