Bottomline’s merger with EPG sparks UK regulators to investigate impact to competition
The UK’s Competition and Markets Authority (CMA) is investigating whether payment software firm Bottomline’s acquisition of Experian’s Payments Gateway (EPG) will “result in a substantial lessening of competition” in the business payments market.
The merger will be referred to a ‘Phase 2’ investigation if both companies fail to offer “acceptable undertakings” to address these competition concerns. This means a more detailed investigation, potentially leading to Bottomline being forced to sell EPG at a discounted price or on otherwise unfavourable terms.
Both companies provide payments software which businesses use on a daily basis to submit direct debits, run payroll and pay suppliers. The CMA sees Bottomline and EPG as “two leading providers” of this software, singling out Bottomline as “by far the largest” and EPG as “a trusted supplier to some of the biggest businesses”.
The CMA’s Phase 1 investigation found that the new, merged company could either increase prices, reduce product availability or reduce its investment in innovation. This conclusion was drawn from the prediction that if a company other than Bottomline bought EPG instead, the market would conversely become more competitive.
“Bottomline is already the largest supplier and has purchased a rival who is trusted by many large businesses with few remaining competitors left in the market,” says CMA’s senior director of mergers Joel Bamford.
He continues: “Our investigation has shown that other options for the EPG business were available which could have resulted in more competition in the future. We are therefore concerned this transaction could lead to prices going up or less development of current software.”
The investigation was triggered under the merger provisions of the Enterprise Act 2002, which protects the competition in all UK markets for goods and services.
Bottomline has been given a 14 October deadline to come back with potential solutions to resolve the CMA’s concerns over competition, otherwise the merger will be referred for an in-depth Phase 2 investigation.