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NortonLifeLock, Avast’s $8.6 Billion Deal Faces U.K. Probe

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(Bloomberg) -- NortonLifeLock Inc.’s $8.6 billion purchase of Avast Plc will face an in-depth probe by the Competition and Markets Authority after it raised competition concerns in the cybersecurity market, marking anther tech deal to face scrutiny by U.K.’s antitrust agency.

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The CMA confirmed on Friday that it took the expected decision after NortonLifeLock opted against offering commitments at this stage.

Avast shares were flat in London Friday, after dropping the most in more than two years after the CMA announced earlier this month that it would trigger a probe unless it was given solutions to deal with its concerns. NortonLifeLock said the decision was surprising and it had no intention of proposing any remedies.

Arizona-based NortonLifeLock bought Avast in a deal valued between $8.1 billion and $8.6 billion in August 2021. The deal between the two cybersecurity companies comes as high-profile ransomware attacks on large companies and infrastructure have increased demand for software guards against hackers.

The CMA has been running the rule over every major tech deal that crosses its desk as it grapples with how to challenge the dominance of a small group of powerful companies. Nvidia Corp. ultimately dropped its plan to buy Arm Ltd. after regulators pushed back on the $40 billion deal.

Makers of legacy antivirus software — which detects threats by matching files on a computer to known malicious code — are trying to expand as more advanced forms of anti-hacking protections grow in popularity.

Avast has a “freemium” distribution model that attracts customers to a free, baseline product and tries to turn them into paying users with more advanced software. Avast is also able to strike deals with advertisers, search engines and other software companies that want to access its customer base.

“These companies are close competitors with few other significant rivals and we are concerned that if completed the proposed deal could lead to a reduction in competition in the UK,” said a CMA spokesperson in a statement. “As NortonLifeLock and Avast have not offered a clear-cut solution to address our concerns we will now carry out an in-depth phase 2 investigation.”

The deadline for the CMA’s next report is Sept. 8. The European antitrust regulator has yet to say anything publicly on the deal.

“We remain of the view that this transaction will only benefit consumers in the U.K.” an Avast spokesperson said in a statement. “We have worked collaboratively with the CMA throughout the review process so far and this will continue into the next phase.”

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