FNZ's proposed takeover of GBST has been brought into question by the Competition and Markets Authority, following an investigation which concluded that the merger could result in UK investors losing out as a result of higher prices, fewer options and less innovation.
FNZ purchased rival retail investment platform GBST in November 2019 for £150 million.
After completing its initial Phase 1 investigation, the CMA found that FNZ and GBST are close competitors in what is a concentrated market with few other significant suppliers. The watchdog believes that smaller or less well-established firms find it difficult to enter or scale up because of the risks and reluctance of customers to change suppliers.
Joel Bamford, senior director of mergers at the CMA, says: "Investment software is critical to the operation of retail investment platforms which are used by many investors in the UK. FNZ is already the largest supplier and has purchased an established rival who is trusted by many platforms, with few remaining competitors left in the market. We are therefore concerned that this transaction could lead to customers losing out."
FNZ has been instructed to address the CMA’s concerns within five working days. If it is unable to do so, the deal will be referred for an in-depth (Phase 2) investigation.