FNZ has slammed the UK Competition and Markets Authority (CMA) for ignoring “robust evidence” as the regulator prepares to rule once more on the platform provider’s 2019 purchase of the-then ASX-listed software firm, GBST.
As reported earlier, the CMA quashed its previous decision to reverse the GBST sale after admitting the ruling relied on faulty market share data.
But in a new submission lodged last week, FNZ argues that the terms of the CMA review – or ‘remittal’ in regulator-speak – remain skewed.
“The CMA is – quite rightly – (re)considering a number of key aspects of its competition analysis, following the quashing of the Final Report of 5 November 2020…,” the FNZ submission says.
“At this stage, however, the indications are that the CMA is intent on reaching the same conclusion by a different route, and that in a number of significant respects its approach may not stand up to scrutiny.”
In particular, the case – put by UK legal heavyweight firm Slaughter and May – rests on allegations the CMA continues to miscategorise the UK platform market while also ignoring the likely ‘counterfactual’ that competitor SS&C would have bought GBST absent the FNZ takeover.
“The extent to which the CMA is collecting new information to address the weaknesses and gaps in its evidentiary base – which would be vital to reach a robust decision on remittal – is unclear,” the FNZ submission says. “It is also concerning that, at this stage in the process – almost 16 months after launching its investigation – the CMA appears to continue to confuse market definition at the platform and the platform solutions levels.”
To date, FNZ is the only party to formally submit to the CMA remittal with all submissions due early in March. The latest FNZ submission follows detailed arguments lodged by the Edinburgh-headquartered platform firm in February.
In the earlier submission, FNZ says the original CMA errors “are material and sufficient in themselves to invalidate an SLC [substantial lessening of competition] finding”.
As well, the Edinburgh-headquartered investment platform firm headed by Adrian Durham, says the CMA did not properly take into account the likelihood GBST would have sold to SS&C in assessing market outcomes.
“If FNZ had not acquired GBST, it is likely that SS&C would,” the February submission says. “As the most likely counterfactual, this is the benchmark against which any impact on competition brought about by the Transaction must be measured. Contrary to the FR, had SS&C and GBST merged, the competitive landscape would have been materially different from a world in which GBST remained in independent ownership.”
Similarly, FNZ says the UK competition watchdog failed to consider that rival firm Bravura was also a contender to take over GBST.
In its March submission, FNZ further calls for access to market survey data that the CMA has collected ahead of the next determination.
“FNZ and its advisers are not currently in a position to understand how such robust evidence can be disregarded in favour of apparently inconsistent responses to flawed questionnaires – and therefore what more could be provided to support its position,” FNZ says.
The CMA is due to issue a provisional report by the end of March with a further round of submissions to follow. According to the CMA timetable, FNZ should find out whether it can retain GBST by mid-May – almost two years after engineering an aggressive A$260 million buyout of the Australian financial software firm.