Britain’s antitrust bark is worse than biting into a cyber deal

LONDON, Aug 3 (Reuters Breakingviews) – Competition investigations are a nightmare for companies and their advisers. Yet a UK cyber deal shows they can also be an opportunity for bold investors. In March, the UK Competition and Markets Authority launched a more in-depth so-called phase 2 investigation into US cyber company NortonLifeLock. (NLOK.O) up to 6.2 billion pounds to resume of its British counterpart Avast (AVST.L), causing the target’s stock to fall sharply. Yet on Wednesday, the antitrust watchdog backtrack, and tentatively approved the deal. Avast shares jumped 42% from the offer price.

A Phase 2 investigation generally implies that there is evidence that a merger could harm competition. In the case of Microsoft rival Avast (MSFT.O) The launch of a new product in June may have helped convince the regulator that the deal would not reduce competition too much in the market. But Microsoft’s growing strength in cybersecurity isn’t new, and the CMA’s initial report in March on the deal minimized the threat of the American technology giant.

Bankers and M&A lawyers may see this episode as proof that the CMA is increasingly willing to launch more in-depth investigationsas he also did for Amazon.com (AMZN.O) partial participation in food delivery company Deliveroo (ROO.L). But the crash in Avast’s share price in March and its spectacular recovery would have been a golden opportunity for any investor willing to bet against the CMA’s overzealousness. (By Karen Kwok)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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