Deal may result in “a substantial lessening of competition”
Plans by Sweden’s Tobii, a provider of medical technology, to buy UK-based adaptive technology rival Smartbox for £11 million in cash have fallen foul of competition authorities and been referred to a full investigation by regulators.
The acquisition was first announced in August 2018. It would see the Scandinavian eye tracking specialist buy Bristol and Malvern-based Smartbox – which sells devices globally through partners in 36 countries – in a debt-financed deal.
This ran into early concerns at the Competition and Markets Authority (CMA), which on January 25 said it was concerned that Tobii’s Smartbox acquisition would result in reduced competition and higher prices.
It demanded solutions that would mitigate its concerns — and gave the two companies a week to provide them. Late last week, it said that they had failed to assuage its concerns and it would be launching a “phase two” investigation.
“Merger Could Stifle Innovation”
As Mike Walker, Chief Economic Advisor to the CMA, said in January: “These are vital technologies bought on behalf of vulnerable people by the NHS, charities and schools.”
“We believe that the merger could stifle innovation and lead to less choice. We will launch a further in-depth investigation if the companies fail to address our concerns.”
In a notice published online late last week, the regulator said that proposals had not convinced it to drop the investigation: “Tobii offered undertakings intended to address the CMA’s concerns.”
“After careful consideration, the CMA was not confident that these would resolve the concerns in a clear-cut manner. The CMA has therefore decided to refer the merger for an in-depth Phase 2 investigation.”
Mike Walker added: “The creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within a market or markets in the United Kingdom for goods or services, including for the (upstream) supply of dedicated AAC hardware, the (upstream) supply of AAC software, the (downstream) supply of dedicated AAC solutions and for the (upstream) supply of eye gaze cameras.
Joint AAC Solutions: Tobii or not Tobii
Tobii and Smartbox both design and supply tech that helps people with complex speech and language needs to communicate; known as “augmentative and assistive communication” (AAC) solutions.
This includes specialised hardware and software like speech generating devices, eye gaze cameras and language systems.
(Tobii is also a provider of eye tracking tools; a sensor technology that enables a device to know exactly where your eyes are focused. The technology, which helps monitor presence, attention, focus, drowsiness, consciousness or other mental states, is increasingly being used to gain insights into consumer behavior or to design new user interfaces across various devices.)
CMA’s Phase 2
The CMA has a statutory period of 24 weeks to conduct its investigation and publish a report. This period can be extended by up to eight weeks at the CMA’s discretion.
It can make one of three decisions at the end of that process:
1: Unconditional clearance.
2: Conditional clearance, subject to legally binding undertakings.
Tobii declined to comment beyond a short statement made on January 25 saying it was collaborating with the CMA’s requirements.