By Dan Ilett, 7 April 2006 16:40
NEWS
A US encryption company has backed off from negotiations to buy a UK competitor after an industry watchdog called for an anti-competitive review of the deal.
Cambridge-based nCipher said today it understood why US company SafeNet had pulled out of the deal after the Office of Fair Trading referred the case to the Competition Commission.
A statement from nCipher said: "Given the OFT's comments regarding the competitive position of the two companies and the time, cost and potential disruption to business that could ensue from a referral, the board of nCipher accepts and agrees with SafeNet's decision."
The OFT said that because SafeNet and nCipher are two of the largest suppliers of hardware security modules (HSM) in the UK, the deal would have to be reviewed before it could be permitted. An HSM is used in computer systems to manage the encryption and decryption of data.
Such a review process involves considerable expense and lasts for several months.
Earlier this week, Vincent Smith, director of competition enforcement, said in a statement: "This transaction will bring together two of the largest suppliers of HSMs in the UK. The loss of competitive pressure between the parties may lead to customers facing higher prices and a loss of innovation."
In order to post a comment you need to be registered and logged in.
Log in or create your silicon.com account below