Final roll of the dice for D&D with Link

Company News

by Glenn Dyer

Canadian group Dye & Durham Corporation is trying to avoid an outright rejection by competition regulator, the ACCC, of its proposed $2.47 billion acquisition of Link Administration Holdings (ASX:LNK).

In the face of a looming rejection from the Commission, which made its reservations known in a lengthy statement in June, Dye and Durham (D&D) is now proposing a court enforced undertaking to sell key assets to remove any potential anti-competitive situation.

As a result, the ACCC is now seeking industry views on the proposed court-enforceable undertaking offered by D&D.

“The proposed undertaking would require D&D to divest its entire Australian business to a purchaser approved by the ACCC. This divestiture would include the SAI Global and GlobalX businesses which D&D acquired in 2021 and would exclude the GlobalX UK operations,” the Commission revealed in its statement on Thursday.

The sticking point for the ACCC is Link’s 42.77% shareholding in PEXA Group which operates an electronic lodgement network which facilitates digital conveyancing settlements.

“D&D and PEXA are participants in the conveyancing sector, which is in a transitional period as it moves to electronic conveyancing and digitalisation,” the Commission explained.

On June 16 the Commission published a statement of issues outlining its significant preliminary competition concerns as a result of the potential vertical integration of D&D’s operations and PEXA.

“D&D’s proposed divestiture undertaking seeks to address competition concerns by removing the potential vertical integration between D&D and PEXA,” ACCC Chair Gina Cass-Gottlieb said on Thursday.

“To accept D&D’s proposed undertaking, we need to be satisfied that it will effectively address all competition concerns but is also structured in a way that can be relied upon to be workable and effective,” Ms Cass-Gottlieb said.

“We are seeking views from market participants and other stakeholders as to whether this undertaking will adequately address the competition concerns,” Ms Cass-Gottlieb said.

“This public consultation should not be viewed as a signal that the ACCC will ultimately accept the proposed divestiture undertakings and not oppose the transaction.”

Link shares rose 1.3% on Thursday to end at $4.46.

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The ACCC’s announcement came less than a day after D&D lost a significant (and similar) case in the UK where it has been ordered by the country’s competition regulator to sell a company in the property conveyancing area that had raised concerns about market dominance.

Britain’s Competition and Markets Authority said on Wednesday that Canada’s Dye & Durham must sell a company called TM Group because of competition concerns.

Dye and Durham paid 91.5 million pounds for TM Group last July.

The UK Authority said the Canadian firm must sell TM Group – a property search and conveyancing services provider – after an investigation that started last October and then became a deeper probe in December.

The Authority said that Dye & Durham’s acquisition of TM Group substantially lessens competition in the supply of property search services in England and Wales.

It said that the merger will reduce competition and could lead to less innovation, higher prices and lower quality services in the market.

“The firms were close rivals before the merger and the evidence shows that the combined business would be the largest provider in the market,” said the organisation.

“The CMA also found that the merger would only leave two other large national suppliers in the market and that competition from smaller suppliers would not offset the competition lost by the merger.”

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

Unless it can get an enforceable undertaking done in Australia, the bid for Link looks dead.

 

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