4th Jun 2009 07:00
News Release
25/09 4 June 2009
Competition Commission requires Capitato sell part of acquired software business
Capita Group plc (Capita) is being required to sell part of the IBS OPENSystems plc (IBS) software business it acquired last year after an investigation by the Competition Commission (CC).
In its final report at www.competition-commission.org.uk, the CC has confirmed that the completed acquisition by Capita of IBS is expected to result in a substantial lessening of competition in the market for revenues and benefits (R&B) software systems, used by local authorities to collect council tax and distribute benefits. This decision confirms the CC's preliminary conclusions at the provisional findings stage.
The merger brought together Capita and IBS, both of which supplied R&B and social housing (SH) software systems to local authorities and SH organizations respectively. The CC does not have concerns about the market for SH software, where there are considerably more suppliers in competition with the merged company.
The CC is now requiring Capita to sell the R&B business of IBS as soon as possible, but if no suitable sale is achieved, the CC will require Capita to sell the entire IBS business.
Inquiry Group Chairman, Christopher Clarke, said:
This merger combines two closely competing suppliers of R&B software to local authorities, leaving only one other supplier actively competing for business. In a stable market with little prospect of entry by new suppliers, our conclusion is that the enlarged Capita R&B business will be able to take advantage of the lack of competition, for example by increasing prices or reducing levels of service to its customers.
We consider that the adverse effects of the merger will have an impact on all customers, whether they are in the process of tendering for new R&B software or already have a contract for such software in place.
We believe that the only way in which we can restore competition for the benefit of customers is by requiring Capita to sell off at least the R&B business of IBS.
Notes to editors
The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
Capita Group plc (a company listed on the London Stock Exchange) acquired IBS OPENSystems plc (a company previously trading on the Alternative Investment Market) on 26 June 2008.
The members of the Capita/IBS Inquiry Group are: Christopher Clarke (Inquiry Group Chairman and Deputy Chairman of the CC), Dr Diane Coyle, Barbara Donoghue and Professor Stephen Wilks.
The Enterprise Act 2002 empowers the Office of Fair Trading to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
Further information on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from its website at www.competition-commission.org.uk.
Enquiries should be directed to Rory Taylor on 020 7271 0242 (email [email protected]).
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