- The CMA will investigate whether the deal could lead to a “substantial reduction of competition”
Britain’s competition regulator will launch an initial investigation into Nationwide Building Society’s £2.9bn acquisition of Virgin Money UK.
The Competition and Markets Authority said it is exploring whether the deal, which will create Britain’s second largest savings and mortgage provider if approved, could result in a “substantial lessening of competition” within any UK market.
The potential acquisition, announced in March, has already drawn criticism after Nationwide refused to give its members a vote on the deal.
Nationwide-Virgin Money UK alliance will create Britain’s second largest savings and mortgage provider if approved
Virgin Money’s biggest independent investor in the UK, fund management firm Allan Gray, agreed that members should have voted on the deal, which it criticized as “likely to sell shareholders too little”.
When the deal was announced, analysts suggested it could actually improve competition in the UK mortgage and savings market.
For their part, Nationwide and Virgin Money UK insist the deal will leave the combined group “better positioned to deliver value to our members and customers, both now and in the future.”
But the CMA is inviting comment on the deal as it launches the first stage of an investigation.
The regulator now has until July 26 to decide whether a deeper “phase 2” investigation is warranted.
Nationwide and Virgin Money UK declined to comment on the CMA investigation, whose expectations were cited in previous investor communications about the deal.