The Australian Competition and Consumer Commission (ACCC) has raised a potential red flag over a deal that would see a significant portion of PEXA’s shares acquired by one of the primary suppliers conveyancing software in Australia.
Dye & Durham – which provides information broking services, conveyancing software, legal practice management software and manual property settlement services in Australia – is proposing to acquire Link Administration Holdings, a substantial shareholder of PEXA, which operates an electronic lodgment network that facilitates digital conveyancing settlements.
The consumer watchdog said the deal raised “significant preliminary competition concerns”.
“While combining D&D and Link does not raise issues, by acquiring Link, D&D would gain the 42.77 per cent shareholding in PEXA Group Ltd that Link currently owns. It is the potential vertical integration of D&D’s operations and PEXA that gives rise to the competition concerns,” the ACCC explained.
ACCC deputy chair Mick Keogh elaborated: “Given PEXA’s position as the only fully operational electronic lodgment network, the ACCC will closely scrutinise any transaction that would result in vertical integration between PEXA and other industry participants.”
While the transaction will not provide D&D with majority control of PEXA, Mr Keogh said he was concerned the deal would still “enable D&D and PEXA to engage in mutual preferential dealing”.
Such behaviour would hinder existing competition or raise barriers to entry in one or more markets in the conveyancing workflow, according to the body.
Interested parties are invited to respond to the ACCC’s statement by 7 July, though some have already voiced their considerable concerns.
E-settlements platform Sympli said it had provided information to the regulator regarding what it characterised as “the continued provocations of PEXA – its refusal to engage with vital industry bodies; and its deliberate spread of misinformation and falsehoods”.
Sympli’s chief executive Philip Joyce said that the ACCC’s investigation “speaks to the fact that the monopolistic behaviour of PEXA must change”.
“Allowing the monopoly operator to fundamentally drive the industry effectively shuts out competition in the market, and with that, value, innovation and outcomes for customers,” he said.
Mr Joyce noted that Australian jurisdictions were already making moves to require all national electronic lodgement network operators (ELNOs) to “interoperate’’ with each other, such as through a bill that recently passed NSW’s Parliament.
“Interoperability can only be achieved through the continuing participation of all industry stakeholders, including the market monopoly,” he said.
“Customers deserve competition and innovation, and through interoperability, the industry can create value for customers.”
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Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.