Watchdog calls for break-up of Tobii-Smartbox merger

Chloe Kent 15 August 2019 (Last Updated August 15th, 2019 15:19)

The UK Competition and Markets Authority (CMA) has called for the dissolution of recently merged med tech firms Tobii and Smartbox.

Watchdog calls for break-up of Tobii-Smartbox merger
The companies both produce specialised software and devices to help disabled people with communication difficulties interact with the world. Image: Tobii

The UK Competition and Markets Authority (CMA) has called for the dissolution of the recent merger between med tech firms Tobii and Smartbox.

A CMA investigation found that Tobii’s acquisition of Smartbox may lead to less choice, lack of innovation and higher prices for people with speech and language disabilities.

Swedish eye-tracking technology firm Tobii purchased UK assistive technology company Smartbox for £11m in October 2018.

The CMA initially raised concerns over the merger in January 2019. Solutions were demanded from both companies to mitigate this, but neither was able to assuage the authority’s fears and a further investigation was undertaken.

The companies both produce specialised software and devices to help disabled people with communication difficulties interact with the world. The devices include joysticks, eye-gaze cameras and speech-generating systems. Their main customers are NHS Trusts, charities and schools.

The CMA warned that the loss of competition brought about by the deal could have “very serious effects” and has ordered Tobii to sell Smartbox to a new owner. It agued that the decreased competition would lead to reductions in the existing product range of assistive technologies in both firms’ remit, leading to a decrease in quality, less new product development and higher prices.

CMA inquiry chair Kip Meek said: “Competition plays a key role in driving improvements in product range and quality – making a real difference for the people who use these technologies to communicate. Competitive pricing also helps to make sure that public bodies aren’t paying more than they should for these technologies.

“Our investigation concluded that the loss in competition brought about by this deal could therefore have very serious effects – less choice, less product development and higher prices. Having carefully considered all options, we decided that only selling the entire Smartbox business would effectively address the concerns we found.”

Tobii has confirmed that it will begin to divest Smartbox but that it strongly disagrees with the CMA’s decision.

Tobii Group CEO Henrik Eskilsson said: “We can only regret CMA’s decision. We are convinced that the merger would have given positive effects for the many in need of assistive technology for communication. However, this was a relatively small acquisition relating primarily to complementing our software portfolio. A divestiture will therefore only have a limited impact on our strategy. Our long-term financial targets for Tobii Dynavox and Tobii Group remain intact.”

Smartbox, which has a presence in Malvern, Bristol and the US, employs about 70 people. Its net sales in 2017 were £9.3m. The divestiture means it is now seeking a new owner.

In a statement on the Smartbox website, a spokesperson for the company said: “Whilst we are disappointed to not work with the great team at Tobii, we are very excited to continue our mission to create innovative technology that is delivered with our passion for service that goes above and beyond.”