Tuesday, 11 September 2018 10:06

Regulator slaps Thales with ‘letter of issue’ over Gemalto acquisition

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Regulator slaps Thales with ‘letter of issue’ over Gemalto acquisition Image courtesy of Stuart Miles at FreeDigitalPhotos.net

New Zealand’s competition regulator The Commerce Commission has sent a letter of issue to defence contractor Thales over its proposed acquisition of fellow data encryption hardware and software provider Gemalto, raising concerns about the impact of the deal on product prices and quality.

“At this stage, we are not satisfied that the proposed acquisition would not give the merged entity the ability to profitably raise prices and/or reduce quality to customers in New Zealand by removing the existing competition between Thales and Gemalto in the supply of certain enterprise key management products, notably the supply of hardware security modules (HSMs),” the Commission says in its letter of issue.

In New Zealand, Thales — like Gemalto a data encryption hardware and software supplier — typically supplies its products via resellers under the brand names nShield, payShield and Vormetric.

And Gemalto supplies data encryption software through resellers under the brand name SafeNet.

The Commission has given Thales until 19 September to submit its response and supporting evidence on 35 points of issue raised in its letter over the proposed merger.

The Commission notes that at this stage, the focus of its analysis has been on the supply of enterprise key management products and, to date, “no party has indicated to us that competition in the supply of enterprise encryption software by itself would be impacted by the proposed acquisition, given the number of alternative suppliers available to customers”.

“However, we consider that the relevant market may be narrower than the market for enterprise key management products,” the Commission says.

Last month, the Commission indicated it would make a decision on whether to give clearance for the proposed merger by 26 September, but also indicated it could extend the date if the issues identified have to be tested further.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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