(BRUSSELS) – The EU Commission approved Tuesday the acquisition of Intrum Justitia by Nordic Capital, conditional on the divestment of overlapping debt collection and debt purchasing activities.
The Commission’s investigation focused on the markets for debt collection and debt purchasing where both Intrum Justitia and Lindorff, a portfolio company of Nordic Capital, are active. The Commission’s concern was that the takeover would reduce competition in both markets in Denmark, Estonia, Finland, Norway and Sweden.
The Commission’s investigation revealed that Lindorff and Intrum Justitia are very strong players on the market of recovery of outstanding debt. Both companies are unique in their scale, reputation and ability to serve large customers that generate high volumes of claims (e.g. banks, utility and telecoms companies). A merger between Lindorff and Intrum Justitia in the five countries concerned could have led to insufficient competition in the market, resulting in lower quality of services and higher prices.
Debt purchasing involves the transfer of a creditor’s debt portfolios to another party, the debt purchaser. In most cases, the acquired debt is then collected by the purchaser itself. The Commission’s investigation found a strong link between debt collection and debt purchasing, as a strong position on the debt collection market helps a competitor to build a strong position on the debt purchasing market, and vice versa.
The probe found that only a limited number of players could purchase certain types and volumes of debt. In the five countries concerned, the companies are mostly active in the purchase of unsecured debt (i.e. debt not protected by collateral), in which large international investors are generally not present. The combination of Lindorff and Intrum Justitia in the five countries concerned could have reduced already limited number of potential debt purchasers and in result debt sellers could have been unable to sell their debt portfolios. Preserving competition in this market will allow debt sellers to better manage their assets and risks and thus to act more efficiently to the ultimate benefit of their customers including retail clients.
In order to address the competition concerns identified by the Commission, Nordic Capital offered to divest the whole of the debt collection and debt purchasing businesses of Lindorff in Denmark, Estonia, Finland and Sweden, and the whole of the debt collection and debt purchasing business of Intrum Justitia in Norway.
These commitments, says the EU executive, fully remove the overlap between Lindorff and Intrum Justitia in the five countries where the Commission had identified competition concerns.
The Commission was therefore able to conclude that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
More information will be available on the Commission’s competition website, in the Commission’s public case register under the case number M.8287.
