Last year, Connells and LSL announced they had disposed of their shares in property data firm TM Group. Connells Group sold its 64.68 per cent shareholding for £58.7m and LSL sold its 32.34 per cent stake for £29.3m. The two deals, announced on the London Stock Exchange, amounted to 97.02 per cent of TM Group’s shares, for £88m.
Dye and Durham, cloud-based software and technology provider, announced it would purchase the company for £91.5m.
The firms did not initially inform the CMA of the merger but after the regulator identified some concerns, an investigation was launched in October last year. This was then referred for an in-depth, independent review in December.
The CMA found that both firms were “two of the largest players” in the supply of property search services and were in close competition with each other before the merger.
The CMA concluded that the acquisition would make them the biggest firm in the sector with limited competition.
The review said the merger could result in higher prices for property search services or worsen service standards.
Property search reports give buyers and sellers information about a property, such as title deeds and planning restrictions, before a sale goes ahead. Reports are orders by conveyancers, solicitors, estate agents and mortgage brokers on behalf of clients and charges for the services are typically included in conveyancing fees.
CMA said the way to address this would be for Dye and 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 and Durham’s purchase of TM Group could increase the costs and reduce quality in these services.”
Reviewing options
Dye and Durham said in response: “The CMA has provisionally found that Dye and Durham’s acquisition of TMG, which closed in July 2021, would lessen competition in the UK property search services market. The CMA also asserts that the only effective way to address the issues it has identified would be for Dye and Durham to sell TMG to a third party. Lastly, the CMA press release gives the erroneous impression that Dye and Durham failed to notify the CMA regarding the transaction when in fact there was no obligation to do so under applicable UK law, which provides only for voluntary notification.
“Dye and Durham disagrees with the CMA’s provisional findings and is evaluating its potential options. Dye and Durham complies with all laws and regulations in every market in which it operates. The company has exercised every best effort to help the CMA with its review of the transaction, explain its benefits and offer a remedy proposal and is ready to continue to work collaboratively with the CMA going forward.”
