NortonLifeLock’s $8 billion plan to buy Avast is facing resistance from a UK regulator over concerns the merger will reduce competition in the antivirus industry.
“This could lead to UK consumers getting a worse deal when looking for cyber safety software in the future,” the Competition and Markets Authority (CMA) said on Wednesday.
The resistance is a little surprising, since there are plenty of other antivirus products on the market. But in a report, the CMA notes that both NortonLifeLock and Avast currently rank as two of the three largest independent providers of security software in the UK, the other being McAfee. (Microsoft’s built-in antivirus was not included since it’s offered for free.)
The CMA also says NortonLifelock and Avast have been “close competitors” in the consumer IT security market. “In particular, the parties’ internal documents showed that they monitor each other more frequently than they monitor other competitors (apart from McAfee),” it adds.
The CMA says other competitors in the antivirus market have a smaller scope, and don't offer a full suite of consumer safety products that also cover VPNs and identity protection like NortonLifeLock and Avast do. As a result, the regulator expects the proposed merger will reduce competition for UK’s antivirus industry. “Unless the companies can offer a clear-cut solution to address our concerns, we intend to carry out an in-depth phase 2 investigation,” says CMA Executive Director David Stewart.
The UK regulator has now given both companies five working days to submit proposals addressing CMA’s concerns about the merger. The regulator can then choose to accept the proposals or embark on an in-depth investigation, which could lead the CMA to push the UK government to stop the merger.
In response, NortonLifeLock says it’ll continue to “constructively” engage with the CMA, although it has no plans to propose any remedies to its acquisition offer. Instead, the company remains confident the deal will be approved.
“We believe this transaction can only benefit consumers across the globe, including in the UK, through increased innovation and greater consumer freedom and choice beyond big tech platform providers in the burgeoning Cyber Safety market,” NortonLifeLock says.
“Regulators from across the globe, including the US Department of Justice, and in Europe the German Federal Cartel Office, and the Spanish National Markets and Competition Commission, have reviewed and cleared the transaction,” the company adds.
Meanwhile, Avast says: “We remain of the view that this transaction will only benefit consumers in the UK. We have worked collaboratively with the CMA throughout the review process so far and this will continue into the next phase.”