CMA requires NEC to sell parts of software business to restore competition

The Competition and Markets Authority (CMA) has said that NEC, a software supplier to the emergency services, must sell some parts of its business after an in-depth merger investigation found that they could end up paying more for essential software in control rooms and for managing duty planning.

NEC and SSS (previously part of Capita plc) are among a small number of providers of essential software used by blue light emergency services (including police forces, fire and rescue services and ambulance trusts) as well as transport service providers (such as TfL and rail operators).

Following a detailed Phase 2 investigation by the Competition and Markets Authority, an independent inquiry group found competition concerns relating to two specialist software product markets that both companies supply, among others. The concerns relate to: integrated communication and control services (ICCS) software, which is used by control room personnel in day-to-day duties such as receiving and making urgent phone calls to communicate with emergency response staff – services which are critical to public safety; duties management systems (Duties) software, which is used by police forces to plan and schedule staff shifts. Supply of this software requires significant expertise and experience.

The CMA group found that the loss of either business as an independent competitor would significantly reduce competition in these two markets. This could lead to UK emergency services paying more for the same software, deter the innovation of new features and products, or result in less choice for customers.

To restore competition, the CMA is requiring NEC to sell off both the ICCS and Duties software businesses. The terms of sale, including approval of the purchaser of these businesses, will be determined in due course by the CMA.

Kip Meek, Chair of the independent CMA inquiry group said, “Emergency services, and the taxpayers they serve, rely on these essential software systems to carry out their vital work – be that tackling fires, crime or taking people to A&E. We have found that this merger risks our blue light services paying over the odds for their software or having access to fewer or inferior alternatives. By selling off the parts of the business where the merger caused problems, the companies will resolve our concerns and help restore competition in these important markets.”