NEC / SSS Phase 2 Decision

NEC must sell some parts of its business after an in-depth merger investigation found that publicly funded emergency services could end up paying more for essential software.

NEC and SSS (previously part of Capita plc) are amongst 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 (CMA), an independent inquiry group found competition concerns relating to 2 specialist software product markets that both companies supply, amongst 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 2 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."

For more information, visit the NEC / Capita merger inquiry page.

Notes to editors:

1.   NEC Software Solutions UK Limited (NEC) and SSS Public Safety Limited and Secure Solutions USA (SSS).

2.   The CMA has concluded that the following divestitures would be effective and proportionate remedies to address the Substantial Lessening of Competition:

a.   A divestiture of the NEC's ICCS business (composed of NEC's APD business (including Cortex), CallTouch and Stream); and

b.   A divestiture of NEC's Duties business (composed of NEC's CARM business), or SSS's Duties business (composed SSS's Origin business) - NEC must sell one of these businesses but it has the choice over which to sell.

3.   The CMA's Phase 2 investigation has found the merger does not give rise to competition concerns relating to the provision of a third software product - a record keeping system known as RMS, which is used by police forces to record case related information.

4.   During the investigation the inquiry group received evidence from NEC, SSS, Capita, customers, competitors, the Police Digital Service, and other interested parties involved in the markets and the sale process. It also looked in detail at who competed in and who won recent tenders, as well as the Parties' internal documents and business plans. The group also looked at the impact of expected technological changes on the markets and competitors, in particular the move to cloud-based software.

5.   For media enquiries, contact the CMA press office on 020 3738 6460 or [email protected]