In August, the UK Competition and Markets Authority (CMA) began an investigation into the acquisition by Bottomline Technologies of the Experian Payment Gateway (EPG) business. Following an-depth review, the CMA has fully cleared the merger without the need for divesture or other commitments from Bottomline.

Oxera advised Bottomline Technologies during the CMA’s review of its purchase of the Experian Payments Gateway business and related assets. Oxera advised Bottomline both in Phase 1 and Phase 2 of the CMA’s merger investigation.

The CMA’s investigation of mergers is a two-phase process. Most are cleared at the end of Phase 1, but a minority require an in-depth Phase-2 investigation. Over the past year, the CMA has conducted nine of these in-depth investigations, of which only two were cleared unconditionally. In light of these statistics, the Phase-2 clearance for Bottomline is particularly welcome.

Oxera provided economics support throughout the case to show that Bottomline and EPG were not close competitors, and that the merger would not result in a substantial lessening of competition in any market. Our analysis helped the CMA to distinguish the EPG legacy position from its current competitive constraint. In its final decision, the CMA accepted that:

Although EPG has a high market share by volume, this overstates the competitive constraint it provides as it largely reflects its historic position in the market. We have therefore found that EPG exerts no meaningful competitive constraint on Bottomline.

This means that the clearance for the CMA is unconditional, and Bottomline can now proceed with the integration of the EPG business.

Oxera is very pleased with this result. Senior Consultant Ilaria Fanton, who managed the project, said:

This is a very good outcome for our client at the end of an in-depth investigation by the CMA. Ultimately, the CMA has accepted our position that post-merger there will remain a number of providers of Bacs Approved Software exerting a competitive constraint in the market. Options such as bureaux and the products offered by banks, namely host-to-host services and online banking, will also remain as suitable alternatives to maintain sufficient competition and choice for customers.