Capita/IBS merger could damage competition.

(From Government News Network)

] COMPETITION COMMISSION 15/09 1 April 2009 Capita/IBS merger could damage competition

The Competition Commission (CC) has provisionally concluded that the completed acquisition by Capita Group plc (Capita) of IBS OPENSystems plc (IBS) could damage competition in the market for the supply of revenues and benefits software to local authorities in the UK.

Before the merger, both Capita and IBS sold revenues and benefits software, which is used by local authorities to collect council tax and business rates revenue and to make certain benefit payments. Although the two companies also both supplied social housing software systems to social housing organizations, the CC has provisionally concluded that the merger would not significantly reduce competition in that particular market.

Christopher Clarke, Inquiry Group Chairman, commented:

This merger combines two closely competing suppliers of revenues and benefits 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 provisional conclusion is that the enlarged Capita revenue and benefits 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 it likely that the adverse effects of the merger will have an impact on all customers, whether they are in the process of tendering for new revenues and benefits software or already have a contract for such software in place.