Nationwide’s acquisition of Virgin Money has been cleared by the Competition and Markets Authority.
In March of this year, Nationwide announced that it had agreed to acquire Virgin Money for approximately £2.9bn.
In its decision, the CMA described the acquisition as a “relevant merger situation” that does not give rise to a “realistic prospect” of a substantial lessening of competition.
This was received positively by a spokesperson for Virgin Money who stated: “We welcome the CMA’s decision to unconditionally clear the proposed acquisition by Nationwide following its Phase 1 investigation.
“The enlarged group will combine two complementary businesses that together can offer more great products and services to a larger customer base.
“We continue to expect that the transaction will complete in the fourth quarter of the year.”
The CMA examined whether the merger would lead to a substantial lessening of competition in the supply of owner-occupied mortgages, BTL mortgages, and/or credit cards.
However, it found that an SLC is not a realistic consequence of the merger for several reasons.
As both parties provide owner-occupied mortgages, the CMA found that the merged entity would remain relatively small in scale in both Great Britain and Northern Ireland.
Although Nationwide is a strong provider, other providers compete more closely with Nationwide than Virgin Money does.
Additionally, the authority examined the acquisition’s impact on buy-to-let as both Nationwide and Virgin Money provide BTL mortgages and the merged entity would be the largest supplier in the UK market according to some measures.
However, it pointed out that it would still have a share of supply below 30 per cent in all segments.
The CMA pointed out that Virgin Money is relatively small and other providers, such as NatWest, Santander, and Barclays, compete more closely with Nationwide than Virgin Money does.
These providers would, therefore, exert a “sufficient” competitive constraint on the merged entity.
tom.dunstan@ft.com
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