In a final report, the Competition and Markets Authority (CMA) has ordered FNZ to sell GBST after finding their completed £220 million merger could lead to a “reduction in the quality of service and higher prices”.

The CMA came to its provisional decision in August and has now confirmed it. The regulatory body said the deal raised “significant” competition concerns in the supply of retail platform solutions to investment platforms in the UK - where FNZ and GBST are two of the leading suppliers.

The merged business would be by far the largest supplier, said the CMA, holding almost half of the UK market.

A group of independent CMA panel members concluded that the loss of competition brought about by the deal could lead to investment platforms - and therefore UK consumers who rely on these platforms to administer their pensions and other investments - facing higher costs and lower quality services.

The CMA's finding was based on the companies’ own tender data and internal documents, as well as “extensive information” provided by a wide variety of customers, competitors and other stakeholders.

Although there are differences in the business model that the two companies use, with FNZ providing an integrated software and servicing solution and GBST being a software-only provider, the CMA found that they “compete closely” and face “few other significant suppliers” at present.

“Looking at how the sector is expected to develop in future, the CMA found no basis to suggest that entry or expansion by other suppliers would mitigate the harm caused by the merger,” it added.

Martin Coleman, chair of the CMA inquiry group carrying out the investigation, said: “The merger has substantially reduced competition in this sector, this matters to the millions of UK consumers who hold pensions or other investments."

He added: “FNZ chose to complete its acquisition of GBST without first seeking merger clearance in the UK, which it is perfectly entitled to do - this came with the risk that the CMA could call the case in for investigation.”

On the confirmation of the CMA order to sell GBST, FNZ said it had no further comment to make at this stage.

A spokesperson for FNZ said: "We note that the CMA has published its final views on FNZ's 2019 acquisition of Australian software company, GBST - we have no further comment at this stage."

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