REG - Competition and Mkts - Dye & Durham / TM Group: Merger update

Dye & DurhamAnnouncement

18/05/2022 12:00

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RNS Number : 9357L  Competition and Markets Authority  18 May 2022

 

Property search services merger could mean homebuyers pay more

 

The CMA has provisionally found that the merger of two firms offering property
search services could lead to a worse deal for homebuyers.

 

Following an in-depth Phase 2 investigation, the Competition and Markets
Authority (CMA) has provisionally found that the acquisition of TM Group by
Dye & Durham substantially lessens competition in the supply of property
search services.

 

Property search reports are used to make sure that buyers and sellers have all
the facts they need about a property - including title deeds, access rights,
planning restrictions, water and sewerage services, flood risk and other
important information - before a sale goes ahead. The reports are ordered from
firms like Dye & Durham and TM Group by conveyancers, solicitors, estate
agents, and mortgage brokers on behalf of people and businesses buying and
selling properties. Charges for property search services arise in almost every
property transaction and are typically included within the conveyancing fees
paid by homebuyers.

 

Dye & Durham, an international provider of cloud-based software and
technology solutions, announced the £91.5 million purchase of Swindon-based
TM Group in July 2021. Both businesses offer property search services to
clients in the UK under a variety of different brands.

 

The firms chose not to notify the CMA about the deal but, as part of its
ongoing monitoring of mergers and acquisitions, the CMA identified potential
concerns and began an initial investigation in October 2021. It was referred
for an in-depth investigation, overseen by an independent inquiry group, in
December 2021.

 

The CMA's in-depth investigation has considered a wide range of evidence,
including from the merging businesses' own strategic documents and a survey of
customers, as well as extensive information provided by customers, competitors
and other industry players.

 

The CMA has provisionally found that this evidence shows that Dye & Durham
and TM Group are two of the largest players in the supply of property search
services in the UK and competed closely before the merger. It also shows that
the combined business would be by far the largest player in the market and
face only limited competition from other suppliers. On this basis, the CMA is
concerned that the deal could result in higher prices for property search
services (or lower quality services, including less innovation). This could
result in higher fees or worse service standards for people and businesses
buying or selling residential and commercial properties across the UK.

 

In light of this loss of competition, the CMA has also set out its initial
view that the only effective way to address the issues it has identified would
be for Dye & Durham to sell TM Group to a suitable buyer.

 

Richard Feasey, chair of the group conducting this inquiry, said:

 

"Buying and selling property can be a challenging experience for many people
and one of the most significant purchases most of us make.

"We need to ensure that fees for search reports are competitive and that we
continue to see innovation in digital services to make the process easier and
faster.

"By reducing competition in an already concentrated market, we have found that
Dye & Durham's purchase of TM Group could increase the costs and reduce
quality in these services."

 

For more information, visit the Dye & Durham/TM Group merger inquiry page
(https://www.gov.uk/cma-cases/dye-and-durham-uk-limited-slash-tm-group-uk-limited-merger-inquiry)
.

 

Notes to Editors

1.   The CMA invites submissions on its provisional findings by 8 June 2022
and its notice of possible remedies, which sets out potential options for
addressing its provisional concerns, by 1 June 2022. The CMA plans to issue
its final decision by 16 August 2022.

2.   The UK merger control regime is voluntary, which means that merging
businesses are free to choose whether to notify a merger to the CMA. The fact
that a merger has not been voluntarily notified to the CMA does not mean that
the CMA will not review it. The CMA has a duty to track merger activity to
determine whether any unnotified merger may give rise to a substantial
lessening of competition. The CMA's Mergers Intelligence Committee, which
keeps merger activity under review, decided to call in the merger for review
after Dye & Durham acquired TMG in July 2021.

3.   There are two routes by which the CMA may come to review a merger
(details of which can be found in the CMA's quick mergers guidance
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fassets.publishing.service.gov.uk%2Fgovernment%2Fuploads%2Fsystem%2Fuploads%2Fattachment_data%2Ffile%2F970333%2FCMA18_2021version-.pdf&data=05%7C01%7CMatthew.Dove%40cma.gov.uk%7C8290989dc39b4d2b833b08da2e9c7694%7C1948f2d40bc24c5e8c34caac9d736834%7C1%7C0%7C637873546887495064%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=sU5hTbDmE5o%2FF5dH5kfC3x4nHWHpoC%2FZM6ZooBh3gxU%3D&reserved=0)
, paragraph 2.5). Businesses can formally notify a merger to the CMA by
completing a Merger Notice or the CMA's Merger's Intelligence Committee can
investigate mergers that have not been notified to it.

4.   Before the merger, the Parties were two of the four largest suppliers
of property search reports, with the other two large competitors being ATI and
Landmark.

5.   The CMA has found that the limited entry and expansion of new suppliers
into the market is unlikely to be sufficient to offset its concerns about the
merger. Neither does the evidence show that smaller firms providing similar
services offer a significant competitive threat to the merging firms.

6.   Canadian-based Dye & Durham has expanded globally over the last few
years, into territories such as Australia and Ireland, as well as the United
Kingdom. Since 2016, it has acquired 11 firms based in England and Wales,
including PIE, PSG Connect, Index, York Place, Terrafirma and Future Climate
Info (FCI), and one in Northern Ireland.

 

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