Competition watchdog blocks' Scots fintech FNZ's £150m takeover of GBST as is

The UK’s competition watchdog has ultimately decided to block Scottish fintech FNZ’s £150 million acquisition of rival GBST – but would allow an amended version.

The Competition and Markets Authority (CMA) has reassessed the deal, and confirmed its view that it could lead to poorer service and higher prices.

The CMA in August last year said it had provisionally blocked the platform firms’ merger – which was inked in November 2019 – following an in-depth investigation.

It has now said that in line with its provisional findings, a group of independent CMA panel members has found in its reassessment that the transaction could “substantially” reduce competition in the sector. “This is because FNZ and GBST, which are both providers of retail investment platform solutions, are close competitors and few other significant suppliers offer effective and competitive alternatives,” it said.

FNZ founder and group CEO Adrian Durham. Picture: contributed.

“In addition to its activities in retail investment platform solutions, which overlap with those of FNZ, GBST also has a capital markets business, which does not currently compete with any of FNZ’s existing activities in the UK. The CMA has considered whether its concerns could be addressed by FNZ selling a narrower package of assets, rather than the sale of GBST in full,” the competition regulator added.

In April, the latter organisation consulted on a proposal requiring FNZ to sell GBST to an independent third party approved by the CMA, with a right to subsequently buy back a limited set of assets relating to the capital markets business – and that would not affect GBST’s competitiveness in the supply of retail investment platform services. The CMA “has concluded this proposal effectively prevents any reduction in competition as a result of this deal”.

A spokesperson for FNZ said: “We welcome the completion of the CMA's investigation. While we have not yet had the opportunity to review the full decision, we also welcome the fact that the CMA appears to have endorsed as effective and proportionate the remedy proposal that we put forward during the remittal process. We will now digest the detail of the CMA’s decision and consider our next steps.”

FNZ previously achieved “unicorn” status after an investment deal valued the company at £1.7bn.

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