US cyber security giant NortonLifeLock’s planned purchase of Czech rival Avast for more than $8 billion risks harming competition and could face an in-depth probe, Britain’s regulator warned on Wednesday.
The Competition and Markets Authority (CMA) said in a statement that it had concerns over the deal, but NortonLifeLock expressed surprise at the news after winning clearance elsewhere.
The pair announced the blockbuster takeover last year to create a leading consumer business as internet activity boomed during the pandemic.
“As the companies are close competitors, with few other significant rivals, the CMA is concerned that if completed the proposed deal could lead to a reduction in competition in the UK market,” the regulator said in a brief statement.
“This could lead to UK consumers getting a worse deal when looking for cyber safety software in the future.”
Both companies have five days to submit proposals to address its concerns.
The CMA will then decide whether to launch an in-depth competition investigation.
The news sent Avast’s share price slumping more than 11 percent in midday trade on the London stock market.
“NortonLifeLock regards this decision as surprising,” it said in a separate statement, adding the deal had already been cleared in Germany, Spain and the United States.
“The parties believe that the merger can only benefit consumers across the globe, including in the UK, through increased innovation and greater consumer freedom and choice.”
The US company “remains confident” that the deal would win approval.
Businesses worldwide are at threat from an increasingly lucrative form of digital hostage-taking, or ransomware attacks, that typically see hackers encrypting victims’ data and then demanding money for restored access.
At the same time, online activity exploded in popularity during the coronavirus pandemic and continues to boom.
Internet-based retail sales surged during the lockdowns as consumers were forced to shop via their smartphones and computer screens.