Anticipated acquisition by Experian plc of Credit Laser Holdings Limited Provisional findings report Notified: 28 November 2018 © Crown copyright 2018 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]. The Competition and Markets Authority has excluded from this published version of the provisional findings report information that 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 Some numbers have been replaced by a range.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. Non-sensitive wording is also indicated in square brackets. Contents Page Summary .................................................................................................................... 4 Provisional findings .................................................................................................. 14 1. The reference ..................................................................................................... 14 2. The Parties ......................................................................................................... 14 Experian .............................................................................................................. 14 Experian’s B2C activities ............................................................................... 15 Experian’s UK B2B activities ......................................................................... 16 ClearScore .......................................................................................................... 17 3. Credit reference bureaus, credit checking tools and credit comparison platforms and pre-qualification services ............................................................................ 17 Industry structure ................................................................................................ 18 Credit reference bureaus ............................................................................... 19 Credit checking tools (CCTs) ......................................................................... 21 Credit comparison platforms (CCPs) ............................................................. 25 Pre-qualification services ............................................................................... 28 Regulated activities ............................................................................................. 29 Recent regulatory developments ................................................................... 30 4. The Merger and its rationale ............................................................................... 32 The proposed transaction ................................................................................... 32 The rationale ....................................................................................................... 32 5. Jurisdiction .......................................................................................................... 33 Enterprises ceasing to be distinct .................................................................. 33 Share of supply test ....................................................................................... 34 6. Counterfactual..................................................................................................... 35 Changes to the regulatory and technological landscape ..................................... 36 Entry, expansion and the ubiquity of credit scores .............................................. 39 Prevailing conditions of competition .................................................................... 40 Provisional conclusion on the counterfactual ...................................................... 40 7. Introduction to our assessment ........................................................................... 41 Introduction ......................................................................................................... 41 Relationship between competition in credit comparison platforms and credit checking tools .................................................................................................... 42 The characteristics of the Parties and their activities .......................................... 43 CCPs are two-sided markets ......................................................................... 43 Attracting users and the importance of product development and innovation 44 Differentiated services ................................................................................... 47 Incumbency advantages ................................................................................ 47 Evidence used in this inquiry .............................................................................. 48 Framework for application of the SLC test .......................................................... 50 8. Competition between the Parties ........................................................................ 51 Introduction ......................................................................................................... 51 Competition prior to ClearScore’s entry ......................................................... 53 ClearScore’s entry ......................................................................................... 53 The introduction of Experian’s free product ................................................... 54 Subsequent discussions of competition ......................................................... 55 Experian’s considerations of acquiring ClearScore ....................................... 60 9. Market definition.................................................................................................. 60 Product market.................................................................................................... 61 1 CCPs ............................................................................................................. 61 CCTs ............................................................................................................. 65 Pre-qualification services ............................................................................... 69 Geographic market ............................................................................................. 71 Provisional conclusion on market definition ........................................................ 71 10. Competition in the supply of credit comparison platforms for loans and credit cards .................................................................................................................. 71 Introduction ......................................................................................................... 71 Market shares ..................................................................................................... 73 Assessment of competition on the user side of the CCP market ........................ 74 Introduction .................................................................................................... 74 Parties’ submissions ...................................................................................... 75 The importance of CCTs as a means of attracting consumers to CCPs ........ 76 Closeness of competition between the Parties .............................................. 79 Constraints from other competitors on the user side of the market ............... 80 Constraints from other channels .................................................................... 87 Lender side ......................................................................................................... 88 Parties’ submissions ...................................................................................... 88 Closeness of competition .............................................................................. 88 Constraints from competitors ......................................................................... 89 Constraints from other channels .................................................................... 90 Constraints from two-sided nature of platform .................................................... 91 Provisional assessment ...................................................................................... 91 Provisional conclusion on CCPs ......................................................................... 94 11. Competition in the supply of credit checking tools .............................................. 94 Parties’ submissions ........................................................................................... 96 Closeness of competition .................................................................................... 96 CCT user numbers and user acquisitions ...................................................... 97 Evidence on the current competitive interactions between free and paid-for CCTs ............................................................................................................ 98 Competition from other paid-for CCTs ........................................................... 99 Competition from other suppliers