UK Regulator Probes NEC Software Solutions Merger With Capita

The United Kingdom’s competition watchdog has launched an investigation into NEC Software Solutions’ acquisition of Capita Secure Solutions and Services.

The Competition and Markets Authority (CMA) announced on Wednesday (Jan. 5) that it has filed an initial enforcement order under the Enterprise Act 2002.

The measure provides the agency with authority to block mergers if it determines it will hinders competition. As a result, NEC must await the outcome of the CMA’s investigation before it can proceed with the £62m, nearly $84 million, purchase that would merge the two companies.

The deal to buy the Secure Solutions and Services business in London from Capita was announced last fall by the U.K. division of Japan-based NEC. It closed on Jan. 4.

It’s unclear how long the investigation will take, and Capita and NEC did not immediately reply to a request from PYMNTS for comment.

In December, PYMNTS reported the CMA published an interim report that found Google and Apple exercise a vice-like grip over mobile devices.

Read more: UK Regulator Advocates Change to Google, Apple’s ‘Vice-Like Grip’ on Mobile App Ecosystems

In it, Andrea Coscelli, CMA’s chief executive, said he is concerned that this duopoly — where two suppliers dominate the market for a commodity or service — over how people use mobile phones is “causing millions of people across the U.K. to lose out.”

The CMA’s findings said the two companies “have been able to leverage their market power to create largely self-contained ecosystems,” making it particularly difficult for other firms to enter and compete in any of the markets where they operate.

The six-page report also noted that more than half of all smartphones in use in 2020 were Apple iPhones, while the rest were all using the Android operating system.

More than 95% of native app downloads through mobile app stores in the U.K. in 2020 were made via the App Store or the Play Store, and Apple’s and Google’s browsers account for 90% of browser usage on mobile devices in the U.K.