The merger of two of the four big property search providers faces an in-depth probe unless they can show it will not reduce competition and increase costs to conveyancers and others.
The Competition and Markets Authority (CMA) said yesterday that Dye & Durham’s £92m purchase of TM Group in July 2021 raised concerns about “higher costs for conveyancers, estate agents and mortgage brokers, which could be passed on as higher fees for people and businesses buying or selling residential and commercial properties”.
Dye & Durham now has just five working days to submit proposals to address the CMA’s concerns, with the watchdog saying that, if they were not suitable, “the deal will be referred for an in-depth investigation”.
The Canada-based company has expanded significantly in England and Wales since 2016, acquiring 11 companies including PIE, PSG Connect, Index PI, York Place, Terrafirma and Future Climate Info.
The CMA noted that the supply of search reports was becoming “more concentrated”, with only two other main suppliers: Landmark Information Group and Australian Technology Innovators (ATI), alongside “a tail of smaller, often regional suppliers”.
The merger would create “a clear market leader” and it was “unlikely” that the efforts of Landmark and ATI would prevent a significant reduction in competition, the CMA said.
It noted too that customers were “insensitive” to price increases; it has seen evidence of Dye & Durham’s intention to raise prices post-merger.
“The CMA also believes that there are material barriers to entry and expansion and that entry of new suppliers or expansion by smaller suppliers would not be timely, likely and sufficient in response to the merger.
“As such, the CMA believes that entry or expansion in England and Wales would not be sufficient to prevent competition concerns as a result of the merger.”
In a statement to the Toronto Stock Exchange, where it is listed, Dye & Durham said it was “continuing to fully cooperate with the CMA and remains confident in the benefits the transaction presents for D&D UK and for the property conveyancing market in the UK”.
Any in-depth investigation would start in the New Year and take no more than 24 weeks, it added.
The CMA’s initial enforcement order – which requires Dye & Durham and TM Group to operate as separate independent companies as they did before the acquisition – remains in force.