OFT to scrutinise Mortgage Brain’s attempt to acquire MortgageStream

The Office of Fair Trading has stepped in again to investigate a proposed acquisition by Mortgage Brain.

In December 2011 Mortgage Brain announced that it had agreed the terms to acquire point-of-sale and case management system provider MortgageStream for an undisclosed sum. The acquisition will mean that 13.4% of authorised UK mortgage firms will be using either Mortgage Brain’s Key system or MortgageStream.

Mortgage Brain subsequently informed the OFT of its plans, prompting the watchdog to launch an investigation into whether the deal would lead to a substantial lessening of competition in the market.

It is the second time the OFT has stepped into a planned acquisition by Mortgage Brain.

In May last year Mortgage Brain had to abandon its bid to acquire rival sourcing system TrigoldCrystal after the OFT referred the deal to the Competition Commission, which would have made the deal too costly for Mortgage Brain to pursue.

Mortgage Brain lost £418,000 as a result of terminating its merger plan. The OFT scuppered the deal over concerns that it would make Mortgage Brain too dominant.

The accounts of MBL Holdings, parent of Mortgage Brain, show that as a result, MBL made a £442,000 loss in the year ending March 2011, compared with a £305,232 profit the previous year. The OFT is considering whether the deal could result in a ’relevant merger situation’ under the merger provisions of the Enterprise Act 2002. It has invited the input of interested parties by February 8, with a view to completing its probe by March 20.

Mark Lofthouse, chief executive officer of Mortgage Brain, says: “We will be giving the OFT every assistance but we feel our combined businesses will only represent a 14% market share.”