OFT refers Mortgage Brain and TrigoldCrystal merger to Competition Commission
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The Office of Fair Trading has referred the proposed Mortgage Brain acquisition of TrigoldCrystal to the Competition Commission.
It says the parties are by far the two largest UK suppliers of mortgage sourcing software products and the parties are considered to be each other’s closest competitors and the merger would lead to a very high combined market share.
The OFT believes that existing suppliers will be unlikely to compete adequately with the merged entity and that barriers to entry in this market in the UK are high.
It is therefore concerned that the merged entity could increase prices and/or decrease innovation, quality, range or service to customers. It says this view is consistent with the significant number of third party concerns received by the OFT.
Ali Nikpay, senior director at the OFT, says: “This merger would bring together the two strongest competitors in the supply of mortgage sourcing software in the UK.
“A significant number of customers are concerned about the potential impact the proposed transaction will have on prices, innovation, investment and choice. We believe that this is an appropriate case to refer to the Competition Commission for a fuller investigation.”
Mark Lofthouse, CEO of Mortgage Brain’s CEO, says, “Following the announcement of the proposed acquisition of TrigoldCrystal by Mortgage Brain everyone we spoke to recognised the considerable benefits it would bring to the mortgage industry.
“However, whilst disappointed, we respect the Office of Fair Trading’s decision and would like to thank all of our customers and business partners for their continued support and feedback throughout this process.
“Mortgage Brain remains as committed as ever to the UK intermediary mortgage market and we will continue to deliver the necessary technology solutions to support our customers in these challenging market conditions.”
Jon Whitmore, TrigoldCrystal’s joint CEO, adds, “Whilst we believed there were benefits to the proposed transaction we have enjoyed a fascinating process and fully respect the decision of the OFT.
“We are looking forward to continuing to play a leading role in the provision of technology to the industry. We will continue to deliver and continuously look to improve our services for our customers to maximise their efficiencies through the use of our technology.”
The Competition Commission is expected to report by September 1 2011.
Mortgage Brain revealed in December 2010 that it was in discussions with the board of TrigoldCrystal and has agreed terms to buy the business for £6.8m.
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Readers' comments (1)
James Sadler - MD Mortgage27.co.uk | 17 Mar 2011 1:41 pm
I can understand the decision by the OFT, as Trigold and Mortgage Brain have almost 100% of the B2B market share. However, we have looked into the possibilities of a B2B alternative, and expanding our B2C proposition to incorporate this, and this remains a possibility going forward. However, as an IFA myself the reason for changing desktop Mortgage sourcing systems would have to be compelling, with significant advantage. Now that the above are strongly embedded into large networks and IFA firms, the alternative sourcing system would have to be cheaper and add value, to encourage brokers and Networks to change. However, we are looking at all possible solutions, and would welcome input and feedback.
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