The Competition and Markets Authority is to conduct an inquiry into whether a potential merger between sub-prime credit providers Provident Financial and Non-Standard Finance would lead to a less competitive marketplace.
In an announcement today, the CMA says it is considering whether or not the merger would result in a “substantial lessening of competition” for consumers.
As well as overlapping in the home credit market, there is potential competition in other similar markets like online loan products and unsecured lending.
The CMA notes that the pair have a number of common shareholders, including Woodford Investment Management, Invesco Asset Management, and Marathon Asset Management.
Provident and Non-Standard Finance have been engaged in heated discussions for several weeks over the unsolicited offer for the former’s entire share capital, with shareholders weighing up whether to accept the deal.
Last week, M&G became one of the best-known names to say it would not accept the offer.
The CMA’s note this morning says that NSF “has acknowledged that the merger gives rise to a realistic prospect of a significant lessening of competition in relation to the home credit overlap.”
NSF has offered to demerge its home credit business to create a separate company that will be listed on the stock exchange to address the loss of competition.
The CMA is inviting feedback until 12 June on any other potential competition concerns should the deal be approved.