The UK’s Competition and Markets Authority (CMA) issued its Phase I decision on October 20 regarding the $3,700 million Getty–Shutterstock merger, announcing that it will refer the deal to an in-depth Phase II review unless the parties offer suitable remedies.
What does this mean?
It means that during the initial regulatory review, the CMA identified competition concerns and would not allow the parties to merge without changes, as the deal could harm the market.
Now there are a few options:
- The parties do nothing → the CMA opens an in-depth Phase II investigation, which can take an additional 3–4 months. This is what we believe is most likely.
- The parties submit remedies in the next 5 days (for example, offering to sell some assets) to address the concerns → if the CMA accepts them, it can clear the deal; if not, it will still open Phase II.
Why does this matter to us right now?
While we expected this outcome, it is still negative news for the companies, and markets may react. Over the next few days, it is likely that the share price of one or both companies drops due to the additional uncertainty.
That is when we can seriously consider whether to add one of these companies — likely Getty — to our portfolio, as the valuation could become more attractive. But we need further analysis before doing so.
Why do we need to wait?
First, because we want to make sure the market has not already priced in this outcome. If we anticipated it, other investors may have too. We want to confirm the stock is genuinely undervalued before acting.
Second, and more importantly, we only have a short summary of the CMA’s concerns. To perform a proper regulatory assessment, we should wait until the full decision is published in the coming days. In other mergers we might not need to wait — but here, given the significant overlaps between the parties, the risk of a negative decision is real.
We could say that, depending on how the stock reacts, this could turn into a high-risk, high-reward opportunity.
What do we do?
For now, you can read our company and regulatory profile analysis here to understand the background to this event.
