Dye & Durham considers possible appeal against CMA merger decision

Dye & Durham says it could potentially appeal the decision by the Competition & Markets Authority (CMA) to effectively disallow its acquistion of fellow property search firm TM Group.

It was announced yesterday that the CMA, after an in-depth investigation that identified competition concerns, had concluded that Dye & Durham must sell TM Group.

In a statement, Dye & Durham said it strongly disagrees with the CMA's decision and continues to believe that the acquisition of TMG would be 'beneficial for the search report market and its customers'. As such, the company says it is reviewing the CMA's final report in detail and will carefully consider its options and next steps, 'including potentially appealing the decision'.

In considering those options, Dye & Durham said it will take the following factors, among others, into account:

• The minimal revenue and EBITDA generated by TMG compared to Dye & Durham's global businesses;

• A review of the detailed reasons published by the CMA;

• The advice it receives from financial and legal advisors; and

• Dye & Durham's focus on other priorities, in particular its focus on closing the LINK transaction.

What's the story?

Back in May, the CMA warned that it may block the merger of the two property search firms, saying it could end up leading to a worse deal for homebuyers.

At the time, Dye & Durham said it would work collaboratively with the CMA, but the Canadian firm also offered a strong rejection of some of the CMA’s initial findings. 

The CMA had originally launched an investigation into the acquisition of TM Group in the autumn of 2021 after Dye & Durham, an international provider of cloud-based software and technology solutions headquartered in Vancouver, Canada, announced the £91.5 million purchase of the Swindon-based firm in July of that year.

Now, following a Phase 2 merger investigation, the CMA has found that the acquisition of TM Group by Dye & Durham ‘substantially lessens competition’ in the supply of property search services in England and Wales.

Before a sale goes ahead, property search reports are often used to ensure that buyers and sellers are in possession of all the facts they need about a home, including things like title, access rights, planning restrictions, water and sewerage services, flood risk and other important information.

The CMA says the reports are ordered from firms such as 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 occur in nearly every property transaction and are usually included within the conveyancing fees paid by buyers.

Both Dye & Durham and TM Group offer property search services to clients in the UK under a range of different brands.

The two firms decided not to notify the CMA about the merger – which they were well within their rights to do, as the UK merger control regime is voluntary – but, as part of its ongoing monitoring of mergers and acquisitions, the CMA identified potential concerns and started an initial investigation in October last year.

This was then referred for an in-depth investigation, overseen by an independent inquiry group, in December 2021.

The inquiry group says it has considered a wide range of evidence, including from the merging businesses’ own strategic documents and a survey of customers, in addition to extensive information provided by customers, competitors and other industry players.

The CMA says the companies were close rivals before the merger, with evidence suggesting that that the combined business would be the largest provider in the market. What’s more, the body found that the merger would leave only two other large national suppliers in the market. As a result, it said, competition from smaller suppliers would not offset the competition lost by the merger.

Consequently, the CMA has concluded that the merger would reduce competition and ‘could lead to less innovation, higher prices and lower quality services in the market’. It added that this could mean a worse deal for people and businesses buying or selling residential and commercial properties in England and Wales.

In order to address this loss of competition, the CMA has concluded that Dye & Durham must sell TM Group to a suitable buyer to be approved by the CMA.

“The merger of two of the biggest players in this market would be bad news for anyone buying or selling property in England and Wales,” Richard Feasey, chair of the independent CMA group conducting this inquiry, said.

“Competition drives innovation and keeps prices down. Without it, we can pay more for worse products and services.”

“To address our concerns, Dye & Durham must sell TM Group in its entirety to a suitable buyer.”

In a short press release issued yesterday, following the CMA’s announcement, TM Group said: “Whilst not an outcome we agree with or would have wished for, tm group respects the decision made and will continue to fully cooperate with the CMA as we work with both them and Dye & Durham to identify a long-term investor that matches our own ambitions to continue to deliver the very best solutions in the market.”

It added: “Throughout the period of review, tmgroup has continued to be managed as a separate business and has continued to invest in it and deliver the types of technology innovation and service that are synonymous with the tmgroup brand, and we want to reassure all of our customers and employees that this will not change as we go through the next phase of this process.”