CMA right to raise concerns over Experian/ClearScore merger

We should be cautious in seeing this as the harbinger of a more assertive and sceptical approach by the Competition and Markets Authority but if that were the case it would surely be welcome

Credit check: Experian and ClearScore provide people with access to their credit ratings and match them to card providers and lenders

It seems there’s a light on at Britain’s competition watchdog, which I and others have been somewhat critical of in recent months.

In a provisional finding the Competition and Markets Authority has raised serious concerns about the merger of the nation’s two biggest credit checkers, Experian and ClearScore.

These two don’t just provide credit scores for banks and other lenders wanting to assess the risks posed by people who want to borrow their money; they provide the same information to borrowers themselves, and then match them to lenders for a commission.

In so doing, they can help the consumer get the best deal and thus greatly assist with personal financial management, which is not something that we’re terribly good at as a nation.

The CMA is worried that competition and the development of new and potentially useful tools could be hampered if the market number one knocks out the number two by taking it over.

It is right to be. ClearScore was a new entrant to this market in 2015 and has grown very rapidly, thanks in no small part to its innovative products.

The importance of the CMA’s intervention in this field was underlined by Becky O’Connor, a personal finance specialist at mutual insurer Royal London, who highlighted the role of credit scorers as “the gatekeepers to financial wellbeing”.

“Ensuring competition and innovation in this market is about much more than profit margins, it’s about making sure people can still access the financial services that they have come to depend on, at the best possible rates,” she said.

Indeed so.

Experian, of course, begs to differ. It says it will maintain both brands if the deal ultimately goes through and that the marriage will enhance competition. But this is what companies always say when they plan mergers and, while the CMA’s findings are provisional ones, it faces an uphill struggle from here on out. It may also come to rue the decision not to offer remedies when the the watchdog wrapped up its phase 1 probe, as deal partners sometimes do.

Critics of the CMA, including myself, have argued that it has been too willing to listen to companies’ arguments in a number of high-profile past cases. One thinks of Tesco’s merger with wholesaler Booker, takeaway app Just Eat’s gobbling up of Hungry House, and the creation of a big five energy providers from the previous big six through the combination of SSE with Npower.

It should be stressed that they are all very different deals involving very different industries, and the CMA would be likely to tell you that its findings in one case don’t read across to another.

So we should be very cautious in seeing this as the harbinger of a more assertive, sceptical approach.

But if that were the case, it would surely be welcome, all the more so given the proposed merger of Asda and Sainsbury’s, which is currently the subject of phase 2 CMA investigation.