• UK CMA provisionally found competition concerns as part of its in-depth investigation of the completed takeover by NEC Software Solutions UK Limited of SSS Public Safety Limited and Secure Solutions USA LLC (previously part of Capita plc).
• Follows UK CMA January 2022 probed NEC software solutions merger.

Background

• SSS provides software solutions and managed services to the emergency services and justice sectors, in the UK and globally; US-based Capita Software (US) offers solutions to transform, simplify links between businesses and customers, governments, citizens.
• UK-based NEC provides specialist software, outsourcing services for the public sector.
• UK CMA launched its investigation into the merger in March 2022, to assess if the merger would result in creation of a relevant merger situation per Enterprise act 2002.
• And if so, if it may result in substantial lessening of competition (SLC) in a UK market.
• In April 2022, UK CMA found competition concerns regarding the supply of vital software to emergency services and transport customers, after it's phase 1 probe.
• NEC and SSS are 2 of a small number of suppliers that supply essential software solutions to emergency service providers, as well as transport service providers.
• These include integrated communication and control services (ICCS) used by control room personnel in day-to-day duties, e.g. receiving/making urgent phone calls.
• On 12 May 2022, UK CMA announced it had referred the merger for an in-depth investigation, after the parties did not offer undertakings to address its concerns.

Phase 2 Provisional Findings

• UK CMA provisionally found competition concerns as part of its in-depth investigation.
• UK CMA found the merger had resulted/may be expected to result in an SLC in supply of Integrated Communication and Control Services software (ICCS) in the UK.
• It also resulted in an SLC in supply of duties management systems software in the UK.

Possible Remedies

• UK CMA issued notice of possible remedies to address its competition concerns.
• UK CMA’s current view is that a behavioral remedy is very unlikely to be an effective remedy to the provisional SLCs, other adverse effects it has provisionally identified.
• However, it will consider behavioral remedies put forward as part of the consultation.
• At this stage, UK CMA identified only one potential effective structural remedy, namely full divestiture of SSS by NECSWS, which would be similar to prohibition of the merger.
• Full divestiture would restore the independent ownership of SSS and NECSWS and the resulting market structure to that which existed at the time of the merger.
• It would thus restore fully loss in the competitive constraint arising from the merger.

Effectiveness

• Deadline for submitting responses to the notice of possible remedies is 30 September 2022.
• The deadline for submitting responses to the provisional findings is 7 October  2022.
• The statutory deadline for UK CMA's final phase 2 decision is 26 October 2022.