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

JurisdictionIreland
PartiesMorgan Stanley,Barra
Date03 June 2004
Decision Date03 June 2004
StatusPreliminary investigation (Phase 1)
CourtCompetition and Consumer Protection Commission (Ireland)
Decision NumberM/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.

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