The CEO of crowdfunding company Seedrs has accused UK regulators of damaging the growth of UK startups by approaching competition concerns with a “policy approach” instead of an “economic” view.
Jeff Kelisky told City A.M. that the Competition and Markets Authority (CMA) has “active policies to block acquisitions by the big companies of British small technology companies”.
In March last year, the CMA blocked Seedr from merging with rival Crowdcube. The regulator said the deal would give the combined entity a 90% combined market share of the UK’s crowdfunding platform market.
Seedrs went on to be acquired by US fintech company Republic for £75m in December.
The Seedrs chief accused the CMA of pushing UK businesses to exit outside of Britain.
“Now, if you were to tell the British investment community and the British entrepreneur community, your path to exit to one of the big tech players is now cut off, you’re going to go somewhere else, go to France or go to Germany, you’ll go, Estonia, you’ll go to the US,” said Kelisky.
Kelisky described the CMA’s actions as “taking a policy approach to a competitive problem, rather than an economic approach”.
He added: “I would like to see a much greater emphasis on objectively understanding the economics of a merger, or a competitive action, than the optics of what it looks like it could be doing.”
In response, the CMA chief executive, Andrea Coscelli, told UKTN that “too much market power is concentrated in too few firms”.
Coscelli said he had heard from businesses that “have found themselves in very difficult positions after problematic deals went through”.
“Some are unable to survive because they can no longer compete and are excluded from key markets, others unable to enter or expand in these markets,” Coscelli said. “In many cases, these strong market positions can be directly related back to acquisitions approved years ago.”
The CMA recently blocked the planned £6bn acquisition of Avast by NortonLifeLock due to market competition concerns.