Completed acquisition by FNZ of GBST Final report 5 November 2020 © Crown copyright 2020 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Website: www.gov.uk/cma Members of the Competition and Markets Authority who conducted this inquiry Martin Coleman (Chair of the Group) Colleen Keck Jeremy Newman John Thanassoulis Chief Executive of the Competition and Markets Authority Andrea Coscelli The Competition and Markets Authority has excluded from this published version of the findings report information which the inquiry group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by []. Some numbers have been replaced by a range. These are shown in square brackets. 1 Contents Page Summary .................................................................................................................... 6 Findings .................................................................................................................... 18 1. The reference ..................................................................................................... 18 2. The Parties, the Merger and its rationale ............................................................ 18 FNZ ..................................................................................................................... 18 Background ................................................................................................... 18 Financial information ..................................................................................... 19 GBST .................................................................................................................. 20 Background ................................................................................................... 20 Financial information ..................................................................................... 20 The rationale for the Merger ............................................................................... 21 FNZ rationale ................................................................................................. 21 GBST rationale .............................................................................................. 22 The transaction ................................................................................................... 22 Evidence from FNZ ........................................................................................ 23 GBST valuations ............................................................................................ 24 3. Relevant merger situation ................................................................................... 24 Enterprises ceasing to be distinct ....................................................................... 25 Jurisdiction test ................................................................................................... 26 Views of the Parties ....................................................................................... 27 Our assessment ............................................................................................ 27 Conclusion on the relevant merger situation ....................................................... 28 4. Industry background ........................................................................................... 28 5. The counterfactual .............................................................................................. 29 Introduction ......................................................................................................... 29 Our assessment .................................................................................................. 30 Conclusion on the counterfactual ........................................................................ 35 6. Market definition .................................................................................................. 35 Overview ............................................................................................................. 35 Product market.................................................................................................... 36 Retail and other types of Platform Solutions .................................................. 37 Delivery model ............................................................................................... 49 In-house provision of software and/or servicing ............................................. 54 Conclusion on product market ....................................................................... 56 Geographic market ............................................................................................. 58 FNZ and GBST submissions ......................................................................... 58 Our assessment ............................................................................................ 59 Conclusion on geographic market ................................................................. 62 7. Nature of competition .......................................................................................... 63 Switching ............................................................................................................ 63 FNZ and GBST submissions ......................................................................... 63 Third party evidence ...................................................................................... 65 Evidence from tenders ................................................................................... 67 Internal documents ........................................................................................ 68 Conclusion on barriers to switching and the degree of switching .................. 68 The main parameters of competition ................................................................... 68 Evidence from the Parties ............................................................................. 68 Third party evidence ...................................................................................... 69 2 Conclusion ..................................................................................................... 71 Procurement processes and contractual mechanisms ........................................ 71 Summary of our findings on the nature of competition ........................................ 72 8. Competitive assessment ..................................................................................... 73 Introduction ......................................................................................................... 73 Shares of supply ................................................................................................. 74 Evidence from the Parties ............................................................................. 74 Our assessment ............................................................................................ 75 Conclusion on shares of supply ..................................................................... 78 Closeness of competition between the Parties ................................................... 78 FNZ and GBST submissions ......................................................................... 78 Third party evidence ...................................................................................... 80 Tender analysis ............................................................................................. 84 Internal documents ........................................................................................ 92 Competition in relation to product development............................................. 96 Conclusion on closeness of competition between the Parties ....................... 98 Competitive constraint from alternatives ........................................................... 100 FNZ and GBST submissions ....................................................................... 100 Third party evidence .................................................................................... 102 Tender analysis ........................................................................................... 105 Internal documents ...................................................................................... 112 Conclusion on competitive constraint from alternatives ............................... 113 Conclusion on the competitive effects of the merger ........................................ 115 9. Countervailing factors ....................................................................................... 117 Entry and expansion ......................................................................................... 118 Views of FNZ ............................................................................................... 118 Views of third parties ................................................................................... 121 Our assessment .......................................................................................... 122 Buyer power .....................................................................................................