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ACCC not opposed to Dye & Durham’s Link acquisition
The competition regulator has accepted an undertaking from global tech company Dye & Durham to divest its existing Australian business to acquire Link Administration Holdings (ASX: LNK).
Jon Bragg and Jerome Doraisamy
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Dye & Durham’s proposed acquisition of Link Administration Holdings is now one step closer to proceeding after the Australian Competition and Consumer Commission (ACCC) announced it will not oppose the deal.
On Thursday (8 September), the competition regulator confirmed it had accepted a court-enforceable undertaking from Dye & Durham (D&D) to divest its existing Australian business.
The ACCC had previously raised concerns about the acquisition due to the potential vertical integration of D&D’s operations and PEXA, in which Link currently holds a 42.77 per cent stake.
However, the undertaking put forward by D&D will see the firm sell its entire Australian business to a purchaser approved by the ACCC, including SAI Global and GlobalX, which it acquired last year but excluding the GlobalX UK operations.
“Without the divestment of D&D’s Australian businesses, the proposed acquisition would have aligned PEXA, a near monopoly provider of electronic lodgment network services, with D&D, a significant supplier of software to lawyers and conveyancers,” ACCC chair Gina Cass-Gottlieb said in a statement.
The regulator noted that it was concerned this alignment would have allowed for mutual preferential dealing that would have hindered competition or raised barriers to entry in one or more markets in the conveyancing workflow.
“We were conscious of PEXA’s position as the only fully operational electronic lodgment network and the sensitive period of transition underway as interoperability between electronic lodgment network operators emerges,” said Ms Cass-Gottlieb.
“Therefore, the ACCC has focussed on ensuring that the post-acquisition market structure does not hinder competition over the longer term.”
Ms Cass-Gottlieb stated that the regulator had carefully considered responses from a broad range of market participants before making its decision.
“Ultimately, the ACCC concluded that the proposed acquisition, taking into consideration the divestiture undertaking, would be unlikely to substantially lessen competition,” she said.
In a statement to the ASX on Thursday, Link confirmed that the acquisition has now also received approval from the Central Bank of Ireland.
A second court hearing in relation to the acquisition, which was due to be held on 9 September, has been rescheduled to 15 September “to allow additional time to receive regulatory approvals which are conditions precedent to the scheme”, according to the firm.
Link originally announced in July that it had accepted D&D’s takeover bid of $4.81 per share, down from its original bid of $5.50 per share last December.
Responding to the news, e-conveyancing company Sympli welcomed the ACCC’s findings and decision to conditionally approve the acquisition.
The regulator’s move is a “timely recognition of the importance of competition in the eConveyancing industry”, Sympli argued.
Sympli chief executive Phillip Joyce said: “The ACCC announcement recognises that further entrenching PEXA’s monopoly over digital conveyancing and related services, through a more fulsome acquisition by Dye & Durham, is not in the best interests of the Australian conveyancing sector.
“Competition is vital in the Australian eConveyancing industry, and all industry stakeholders are tirelessly working toward a more competitive industry, initially through the delivery and implementation of interoperability.
“It is critical for users to be able to work on their platform of choice while collaborating with parties on a different platform.”
The next stage for a competitive market, Sympli continued, is an effective electronic lodgement network operator (ELNO) enforcement regime as soon as possible, and achieving meaningful outcomes from interoperability by the middle of next year.
This will allow, the company opined, industry stakeholders to implement a safer and more resilient ecosystem, “thus enabling better outcomes for everyone involved in the eConveyancing process, from home buyers and sellers to banks and practitioners”.
