UK Watchdog May Block UK Crowdfunding Deal

The UK’s competition watchdog has stated that it is minded to block a merger between two crowdfunding businesses Crowdcube and Seedrs, on the grounds that it would restrict competition in Britain’s nascent market, reported The Financial Times.

In a decision published on Wednesday, March 24, the Competition and Markets Authority (CMA) stated the merger could “result in UK [companies] and investors losing out as a result of higher fees and less innovation.”

Seedrs and Crowdcube are the two biggest businesses in the UK crowdfunding market, which channels retail investment into early-stage companies. Neither has generated a profit yet.

The CMA stated the two “compete closely” to win business from small and medium companies and that a “significant” number of these companies relied on crowdfunding. 

“The CMA’s initial view is that blocking the merger may be the only way of addressing these competition concerns,” the watchdog stated.

A final decision will be made in April.

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