The UK's Competition and Markets Authority’s (CMA) stated that Experian’s acquisition of start-up rival ClearScore could reduce competition in the sector and impact customers.
Image: CMA’s in-depth investigation finds reduced competition in case of Experian and ClearScore merger. Photo: Courtesy of Crown copyright.
CMA, after conducting its phase 2 of investigation found that the takeover could be potentially harming the continued development of digital products which help people understand their personal finances.
The UK regulator referred the proposed merger between the credit score checking firms for an in-depth Phase 2 investigation in July this year, after it found concerns that the deal could have a negative impact on the services being offered to the customers, once the merger takes place.
During the phase 1 of the investigation, the results of which were announced in July ending, the CMA found that the merged company would be less likely to innovate in helping people better understand their finances and could potentially lead to customers paying more for credit cards and loans.
The deal was referred to in-depth or phase 2 investigation unless Experian offered acceptable ways to address the concerns raised by CMA.
The two credit score checking firms are the largest in the UK. While Experian offers both free and paid-for credit checking services, its rival ClearScore, which entered the market in 2015, quickly became a market leader in free credit checking tools for customers.
Experian and ClearScore also provide customers with comparisons of third party lenders such as credit card providers and banks.
CMA Inquiry Chair Roland Green said: “Our investigation has shown that this is a fast-paced and evolving market, and that both Experian and ClearScore are an important part of that.
“The provisional findings in our investigation show that Experian’s proposed takeover of ClearScore is likely to weaken competition in the sector and have a negative effect on the services offered to customers.”
The watchdog is now asking for views on these findings by this 19 December and it will assess all the evidence before making a final decision, which will taken by 11 March, next year.