The UK's Competition and Markets Authority (CMA) has provisionally found that the merger of two property search firms could mean homebuyers end up paying more.
The CMA said that an "in-depth Phase 2 investigation" showed the acquisition of TM Group by Dye & Durham (DND.TO) would "substantially lessen competition in the supply of property search services".
The CMA provisionally found that Dye & Durham and TM Group are two of the "largest players" in the supply of property search services in the UK and competed closely before the deal.
The combined business would be "by far the largest player in the market and face only limited competition from other suppliers", according to the CMA.
This has led to concerns that the merger could mean prices for property search services or lower quality services, including less innovation which could result in "higher fees or worse service standards for people and businesses buying or selling residential and commercial properties across the UK".
Property search reports are important in ensuring that buyers and sellers have all the facts they need about a property before a sale goes ahead.
This includes information about title deeds, access rights, planning restrictions, water and sewerage services, flood risk and other important information.
Industry professionals including conveyancers, solicitors, estate agents, and mortgage brokers order the reports on behalf of people and businesses buying and selling properties from firms like Dye & Durham and TM Group.
Almost every property transaction incurs charges for property search services which are usually included in the conveyancing fees paid by buyer of the property.
Canada-based Dye & Durham, an international provider of cloud-based software and technology solutions, announced that it intended to purchase of Swindon-based TM Group in July 2021 for £91.5m ($1.1bn). Both firms offer property search services to UK customers under several different brands.
The firms did not notify the CMA of the deal but, as part of its ongoing monitoring of mergers and acquisitions, the CMA identified potential concerns and began an initial investigation in October 2021. The merger was referred for an in-depth Phase 2 investigation, overseen by an independent inquiry group, in December 2021.
In light of the investigation, the CMA has set out its initial view that Dye & Durham should sell TM Group to a suitable buyer in order to effectively address the issues it identified.
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 & Durham’s purchase of TM Group could increase the costs and reduce quality in these services.”