UK regulator to refer Experian-ClearScore deal for full investigation

CMA has said a merger could “result in a substantial lessening of competition”

Experian and ClearScore are used by millions of consumers  to check their credit scores, understand their finances, and choose loans and credit cards online

Experian and ClearScore are used by millions of consumers to check their credit scores, understand their finances, and choose loans and credit cards online

 

Dublin-headquartered Experian’s £275 million (€308 million) deal for its main British rival has been dealt a major blow after the UK regulator on Tuesday announced plans for an in-depth investigation amid competition concerns.

Experian announced plans to acquire ClearScore in March. However, the companies, which are the top two providers of free credit score-checking services in Britain, were warned of a possible investigation earlier this month after the Competition and Markets Authority (CMA) decided a deal between the two rivals could “result in a substantial lessening of competition”.

It warned the merged company “would be less likely to innovate to help people better understand their finances, potentially leading to people paying more for credit cards and loans.”

Credit scores

Experian and ClearScore are used by millions of consumers in the UK to check their credit scores, understand their finances, and choose loans and credit cards online.

According to the regulator, Experian was provided an opportunity to address competition concerns but did not do so. The CMA on Tuesday confirmed it was to refer the merger for a full in-depth investigation, a move that casts doubt on whether the deal will now proceed.

A final decision on the acquisition will not now be made until mid-January 2019, the regulator said.

Experian, which is listed in London, is the world’s largest credit data company, with 16,500 people employed in 39 countries. Last month it reported annual revenues of $4.6 billion.

Bank facilities

The company revealed plans to acquire ClearScore in March, with the deal to be funded via existing committed bank facilities.

Experian did not comment on the CMA’s decision. However, it recently said it believes the proposed acquisition “is a good move for innovation, competition and consumer choice in the UK”.

ClearScore, which was founded in 2015 and has six million users, is on track to generate revenue of about $55 million in 2018, a 50 per cent increase on the previous year.