The CMA said the anticipated acquisition by Nationwide Building Society of Virgin Money “is a relevant merger situation that does not give rise to a realistic prospect of a substantial lessening of competition”.
As part of its probe of the £2.9bn deal, it assessed the potential impact on mortgages, both owner-occupied and buy to let (BTL), and credit cards.
It said it received submissions and responses from the lenders, other companies and competitors, mortgage brokers and price comparison websites. It also engaged with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
It also received concerns from people regarding Nationwide’s move not to allow members to vote on the proposed acquisition. However, this falls outside of its statutory duty to promote competition, the CMA noted.
What did the CMA probe find?
On the owner-occupied side, the CMA said that the merged entity would be “relatively small in scale” in Great Britain and Northern Ireland.
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The report (CMA summary of decision) concluded that although Nationwide was a “strong provider” in the space, other providers “compete more closely with Nationwide than Virgin Money does”, such as Lloyds and NatWest, and “would exert a sufficient competitive constraint on the merged entity”.
On the BTL side, the report noted that the merged entity would be the largest supplier of BTL mortgages according to some measures, but it would have a share of the market of below 30% in all segments.
The CMA added that Virgin Money is “relatively small” and other providers compete more closely with Nationwide than Virgin Money does, and again this would “exert a sufficient competitive constraint”.
Turning to credit cards, the CMA said that while Virgin Money was a “relatively larger provider”, the share of supply was below 30%.
It added that Nationwide is “small and only provides credit cards to existing customers”, and other competitors would “exert a sufficient competitive constraint on the merged entity”.
Based on the evidence received and its assessment, the merger will not be referred further under section 33(1) of the Enterprise Act 2002.
This article is based on one that was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: CMA clears Nationwide-Virgin Money merger.
