Sirius buy not anti-competitive
SSP’s acquisition of Sirius, which was given the green light by the Office of Fair Trading (OFT) yesterday, will make the largest software solutions company for the insurance industry.
The OFT had been investigating the deal for the past month to determine if the combined company would pose a threat to the competitiveness in the insurance software market.
But in a statement the OFT said: “This merger has been cleared - it did not meet the relevant merger threshold.”
SSP can now go ahead with its acquisition plans and the legal completion date remains 6 July.
The OFT investigation could have resulted in the acquisition being put-on-hold until it was satisfied the SSP/Sirius merge had no major service overlaps.
The OFT usually needs 40 days to complete an investigation and it had began looking into the matter on 4 June. The deadline for posting comments on the deal was 18 June.
In addition, if the OFT finds anything which results in the “lessening of competition in the market” - it can instruct the company concerned to carry out an undertaking to sell off parts of the business.
In the worst case scenario SSP’s acquisition of Sirius, could have been passed to the Competition Commission (CC).
If that happens, experts say the company could have been looking at months of intense probing by the commission’s auditors.
The Competition Commission would have the power to either allow the deal to go ahead, give clearance for only parts of the company to continue trading or block the whole venture.
Despite speculating that the merger would run into problems with the OFT because of claims that the combined company would control some 45% of the market, David Rasche, executive chairman of SSP remained adamant that the OFT investigation would result in a positive outcome.
“The spend on IT in general insurance is well in excess of £1bn. Our share of that market is pretty low in comparison.
“The OFT looks into the vast majority of public acquisitions so it’s not unusual and there’s nothing untoward either. We commend the professionalism of the OFT,” said Rasche.
