The completed Diebold / Wincor Nixdorf merger has led to a CMA (Competition and Markets Authority) investigation as to whether the merger will result in concerns for competition in the market.
The investigation has been called an “in-depth investigation” because there is already a concern that the merger will result in the “substantial lessening” of competition in the market.
The companies are being asked for undertakings, or they could face sanctions from the CMA.
The companies previously were competing closely against each other in the supply of cash points here in the UK. Reportedly, there may be only one other credible competition in the market, and there is a small chance of anyone else entering the market to compete effectively.
With two close competitors merging, and only one other major player in the market, competition could be reduced substantially, which may adversely affect consumers in the market. This is a cause for serious concern for the CMA who is conducting an in-depth investigation in to the merger.
Why is a merger like this a bad thing?
When there are less competitors in a market, there is less stress on the competing companies to have to compete for business. Good healthy competition can drive forward innovation, efficiency, and keep prices down; so, in the absence of this, prices may stay high, and businesses may be less inclined to innovate and act efficiently.
It’s not even about whether a business is motivated to do it – it’s about whether there is a need to do it or not. When competition is healthy, businesses will often be looking for new ways to be more efficient and save costs, and pioneer innovation to help keep them ahead of the game. This is great for the consumers.
So, mergers which see a market of three major players go down to two, when two of them merge, may be disastrous. The CMA has every right to be concerned about this merger, and we’ll try and keep you up to date with the progress of this.