PracticeConsultingEC gives all-clear to Cap Gemini purchase of E&Y consulting

EC gives all-clear to Cap Gemini purchase of E&Y consulting

The European Commission has approved the acquisition of Ernst & Young's global consulting and IT activities by French-based Cap Gemini.

Although the operation will significantly reinforce Cap Gemini’s position as a global consulting and IT services provider, the Commission said the market will remain fragmented, rapidly growing and driven by technological innovation.

The Commission concluded that the merger would not create a dominant position in Europe.

Analysis of the deal focused on the market for the provision of IT services and notably on the consulting segment. It concluded that Cap Gemini and E&Y largely complement each other geographically since Cap Gemini’s practice is chiefly based in Europe and E&Y’s strength lies in North America. The Commission also said the parties also complemented each other in their activities; E&Y is seen as strong in general consulting while Cap Gemini’s strength is more in the IT field.

The transaction brings about minor overlaps in a very dynamic and competitive market where customers have considerable leverage to play one supplier against another, the report said.

There are no indications that the operation could alter this present situation significantly. In view of relatively low combined market shares and the presence of strong existing and potential competition in all markets considered, the Commission decided not to oppose this operation and to declare it compatible with the common market and with the European Economic Agreement.

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