Decision Nº M/04/027 from Competition and Consumer Protection Commission, 2004-06-03

• Court: Competition and Consumer Protection Commission (Ire)
• Parties: Morgan Stanley,Barra
• Decision Date: 03 June 2004
• Date: 03 June 2004
• Status: Preliminary investigation (Phase 1)
• Decision Number: M/04/027

1

Determination No. M/04/027 of the Competition Authority, dated 3rd June 2004,

under Section 21 of the Competition Act, 2002

Notification No. M/04/027 – Proposed acquisition by Morgan Stanley of Barra

Inc.

Introduction

1. On 4th May 2004 the Competition Authority, in accordance with Section 18 (1)

of the Competition Act, 2002 (“the Act”) was notified, on a mandatory basis, of a

proposal whereby Morgan Stanley would acquire 100% of Barra Inc. (“Barra”)

Following completion of the transaction, Morgan Stanley proposes to merge

Barra with Morgan Stanley Capital International Inc (MSCI), a company in

which Morgan Stanley has a 90% equity interest.

The Parties

2. Morgan Stanley is a provider of global financial services for individual,

institutional and investment banking clients. Its sales in Ireland in the most

recent financial year were approximately €105 million. MSCI, with which it is

proposed to merge Barra, provides equity indices and benchmark products that

are used by investment managers to implement efficient trading strategies. MSCI

derived a turnover in Ireland of €[0-2] million in the most recent financial year.

3. Barra’s principal business is providing risk management systems and services to

managers of portfolio investment risk. Its products evaluate the risk associated

with investment decisions, benchmarking the risk profiles against an index

selected by the client. Barra is headquartered in the US and has offices around

the world, though not in Ireland. It estimates that its sales in Ireland amount to

less than €[0-2] million.

Analysis

4. Barra’s analytics software can be used in conjunction with the benchmark

products of MSCI in order to understand the returns and volatility of a portfolio

and modify the constituents of the portfolio in order to alter the level of risk and

return. The products are thus complementary although they do not directly

overlap. Barra estimates its share of risk management software products

worldwide and in Ireland at approximately 10%. Given that Barra’s sales in

Ireland are not significant and that there are other providers of risk management

services including Factset/Northfield, Wilshire Associates and APT, the

transaction does not give rise to competition concerns.