Capita's acquisition of IBS referred to OFT

Capita’s acquisition of local government software player, IBS OpenSystems, has been referred to the office of Fair Trading (OFT) to decide whether the deal warrants a look by the Competition Commission. The acquisition was announced in June and seemed eminently sensible to us (see Capita to buy IBS). Both players have software for local government authorities and housing associations, but it would probably be fair to say that Capita has the stronger suit in Revenues & Benefits, whereas IBS does a better job in Social Housing software.

We think the issue has only arisen because of Northgate’s recent acquisition of Anite’s public sector business (see Anite sells Public Sector business - at last!), potentially over-concentrating the market for local government software. We spoke to the OFT and it appears that a decision will be made by mid-November whether to refer the deal to the Competition Commission. They wouldn’t say, however, what (or who!) precisely triggered the investigation. If the deal is referred, this could add another 6 months before the matter is resolved, one way or the other. We understand that none of Capita’s prior acquisitions (of which there are many!) have ever gone that far. Meanwhile, we hear it’s pretty much ‘business as usual’ (well, relatively speaking) for both Capita and IBS, which will continue to run independently till then. It would be a terrible nuisance if it was eventually decided that the deal had to be revoked, more so for IBS, frankly, than for Capita. Let’s hope that sanity – and good market governance – eventually prevail.

Footnote - In the same vein, the OFT cleared BAE Systems acquisition of Detica yesterday - which seemed somewhat of a 'no-brainer' anyway.