UK CMA: NortonLifeLock's acquisition of Avast could harm competition in the cyber security market

The firms have five working days to submit proposals to address competition concerns

Britain's Competition and Markets Authority (CMA) has opposed NortonLifeLock's proposed $8 billion acquisition of Avast, citing fears that the deal would restrict competition in the antivirus industry.

The CMA said Wednesday that it has closed its phase 1 probe into NortonLifeLock ' s proposed acquisition of Avast, concluding that the two firms are close competitors, with few other significant rivals, and that a merger between the two could harm competition in the market.

The merger might also result in British consumers obtaining a worse deal when seeking for security software, it added.

NortonLifeLock and Avast now have five working days to submit proposals in response to the watchdog's competition concerns.

The CMA will then decide whether to approve the proposals or launch a phase 2 inquiry, which might result in the CMA pushing the government to block the merger.

"We are living more of our lives online and it is vital that people have access to competitive cyber safety software when seeking to protect themselves and their families," said David Stewart, CMA Executive Director.

"Unless the companies can offer a clear-cut solution to address our concerns, we intend to carry out an in-depth phase 2 investigation," he added.

NortonLifeLock said it would continue to engage with the CMA on the issue, although the firm has no plans to present any Phase 1 remedies as part of its acquisition bid.

It described the CMA's decision as "surprising," stating that it remains confident the government will approve the deal.

"We believe this transaction can only benefit consumers across the globe, including in the UK, through increased innovation and greater consumer freedom and choice beyond big tech platform providers in the burgeoning cyber safety market," NortonLifeLock said.

Avast said the transaction will only benefit customers in the United Kingdom.

"We have worked collaboratively with the CMA throughout the review process so far and this will continue into the next phase," it noted.

NortonLifeLock announced in August 2021 that it had reached an agreement to buy London-listed competitor Avast in a cash-and-stock transaction for more than $8 billion.

The firms said at that time that the merger would create a 'mega' IT security firm, devoted to protecting 500 million consumers from both companies.

The respective boards of directors of the two firms said they saw the deal as an opportunity to "create a new, industry-leading consumer cyber safety business, leveraging the established brands, technology and innovation of both groups to deliver substantial benefits to consumers, shareholders, and other stakeholders."

The two firms offer cyber security software to consumers under multiple brands.

Avast has been offering both free and paid antivirus software for years, and has about 435 million 'freemium' subscribers. It offers a free, basic product to users and then tries to turn them into paying customers with more advanced software.

NortonLifeLock sells paid anti-identity theft and security products to consumers. The company was previously known as Symantec, before it sold its enterprise-security business to Broadcom in 2019.

Last year, Norton bought German security firm Avira, for around $360 million in an all-cash deal. Norton CEO Vincent Pilette said at the time that adding Avira would help NortonLifeLock to accelerate its overseas growth and "expand our go-to-market model with a leading freemium solution."