CMA reveals details of go-ahead for ZPG/Expert Agent merger

The Competition and Markets Authority has released the full wording on its decision to give the go-ahead to ZPG’s acquisition of Expert Agent.

The deal was called in to ensure there were no uncompetitive overlaps involving ZPG subsidiary Property Software Group. The CMA gave the in-principle go ahead to the deal - which it calls a merger - a month ago, but has only just released its background thinking on the decision.

The authority says it tested whether the merger could give rise to “horizontal unilateral effects” in the supply of customer relationship management software within the property and agency industries.

The CMA analysed shares of supply based on revenues, examined estate agent branch penetration, assessed the relative growth rate of the two companies and their main rivals, and conducted a qualitative and quantitative analysis of the closeness of competition.

In a statement, the CMA says that it found “a sufficient number of credible and effective CRM property software alternatives would continue to compete with the merged entity. Almost all these suppliers offer cloud-based and integrated single platform solutions, allowing estate agents to organise sales, lettings, and property management together in one package.”

This include the two companies‘ main rivals in this field, namely Reapit, Dezrez, VTUK, PropCo, CML, Qube (Aspasia), LetMC, Thesaurus, Estates IT, and 10ninety. The CMA also found that there are over 30 other CRM property software providers that compete to some extent at least.

The CMA also found that the ZPG/PSG and Expert Agent offerings were somewhat differentiated.

“PSG provides a more expensive and customisable software package, while Expert Agent provides a cheaper ‘no frills’ offer particularly targeted at smaller estate agents” concluded the authority.

“The CMA therefore believes that the merger does not give rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the supply of CRM property software.”

The CMA also analysed whether the merger could give rise to so-called “vertical effects” in terms of its relationship with property portals, with the authority examining whether the merged entity could degrade the quality of the upload feed to rival property portals such as Rightmove or OnTheMarket.

The authority’s statement concludes: “The CMA found that the merged entity would not have the ability to engage in such a strategy: the large number of credible upload alternatives remaining post-merger would render such a strategy unfeasible.”