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Britain’s competition regulator is warning Dye & Durham Ltd.’s recent acquisition of a rival British legal software provider could drive up costs for domestic home buyers and sellers, as has happened following other deals by the Canadian company.

The Competition and Markets Authority (CMA) on Thursday stated it was “concerned” the Toronto company’s July $156-million purchase of TM Group (U.K.) Ltd., which sells software used by real estate professionals to order property-search reports in England and Wales, “could lead to a reduction in competition.” The deal reduces the market to three competitors with D&D as “a clear market leader.”

That “could lead to higher costs for conveyancers, estate agents and mortgage brokers, which could be passed on as higher fees for people and businesses buying or selling residential and commercial properties,” the CMA said. The authority gave D&D until Dec. 16 to address its concerns or face “an in-depth investigation.”

The review comes on the heels of a series of acquisitions by D&D of legal-software providers in Canada that were followed by massive prices hikes of as much as 563 per cent. That provoked an outcry from several of its real estate legal-practitioner customers and dozens of complaints to the Competition Bureau of Canada.

John Robinson, D&D’s chief commercial & people officer, said in a statement that the CMA’s action is in the “normal course of business for acquisitive technology companies like Dye & Durham.

“In Canada, we price our products and services based on the value our clients derive from real estate transactions, and in every market we operate, our long-term success and growth is contingent on a loyal and engaged customer base,” he added. “We continue to invest significantly in improving our customers’ experience and their ability to do their job better globally.”

The CMA stated it “has seen evidence of D&D’s intention to raise prices post-merger.”

That has in fact happened several times in Canada. The Globe and Mail has this year reported on significant price hikes D&D imposed with little warning in several Canadian provinces for customers to use its software for handling real estate transactions such as home purchases, refinancings and intergenerational transfers. Last month, it increased the price for B.C. customers to $199 a file to use its software, up from between $30 and $75. In January, D&D told Ontario customers it was increasing the cost to use its software to process transactions by more than 400 per cent, to $129 a deal.

Those increases came on the heels of D&D’s purchase last December of DoProcess, Canada’s largest provider of real estate practice management software, from Toronto-based Teranet Inc. The purchase gave D&D a dominant market share in Ontario, and left British Columbia with one dominant provider of conveyancing software. Price hikes have also followed D&D purchases in B.C. and Alberta recently.

Many customers told The Globe there was little they could do other than pass on the higher costs to customers, although smaller rival LawyerDoneDeal Corp., said it had doubled its business this year as some price-sensitive customers left D&D for its lower-cost service.

Vass Bednar, executive director of the Master of Public Policy in Digital Society program at McMaster University in Hamilton said the British response was at odds with that of the Canadian Competition Bureau, which “has been silent on similar purchases. [That] is another reminder that our efficiency-driven attitude toward competition is increasingly out of step with consumer expectations. It seems like mergers are slipping through the cracks in Canada.”

“It is observable that prices were raised right after the acquisition,” Ms. Bednar added. “This is old-fashioned monopolization.”

A Competition Bureau spokeswoman confirmed last month it had received an undisclosed number of complaints about D&D’s price hikes in B.C. and would undertake “a thorough examination of the facts to determine if an investigation is warranted.”

Price increases are a core part of D&D’s strategy, which involves buying companies that provide critical software-based services to law firms – and have little competition and high switching costs. That “reduces the likelihood that customers seek out new vendors once the solutions have been implemented, regardless of cost,” D&D stated in its prospectus last year.

The company then cuts costs and raises prices, which clients pass on to their customers. On Monday, D&D announced a $500-million deal to buy Telus Corp.’s payment-processing business, which processes 140 million bill and tax payments annually and most real estate transactions in Quebec. “We have a repeatable playbook … it is really like a machine” making and integrating deals, chief financial officer Avjit Kamboj said Tuesday on a conference call with analysts.

In a research note Thursday, BMO Nesbitt Burns Inc. analyst Thanos Moschopoulos said a “worst-case” scenario for D&D would involve selling TM at a discount and cutting into future operating earnings. TM reported an operating profit of about $7.8-million last year. Mr. Moschopoulos had estimated that would jump to about $15-million in D&D’s fiscal year ending next June 30 and roughly double in the following year, accounting for a mid-to-high single-digit share of the $384-million he estimates it will earn in the latter period.

Any CMA remedy that involves a full or partial divestiture of D&D’s British assets will translate into a negative impact of $2 to $3.60 a share, Mr. Moschopoulos wrote. D&D stock was trading down about 1 per cent in early afternoon trading Thursday.

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