The Australian Competition and Consumer Commission today announced that it has opposed the proposed acquisition of Ernst & Young’s tax compliance software business by Thomson Reuters.
"The ACCC concluded the acquisition is likely to substantially lessen competition in the markets for the supply of income tax and fringe benefits tax compliance software," ACCC Chairman, Graeme Samuel, said today.
Thomson Reuters proposed to acquire Ernst & Young’s tax compliance software business which licences out software products, including Tax Integrator and FBT Organiser, to companies who use the software products for their tax compliance.
The ACCC concluded that the prospect of new entry or expansion of the remaining competitors was unlikely, and thus would not sufficiently constrain Thomson Reuters from increasing its prices for the software products post-acquisition.
Similarly, the ACCC received evidence that suggested that the ability for companies to develop their own in-house solutions was also unlikely to be capable of constraining the merged entity from raising prices.
The ACCC was also concerned that the merger was likely to impact customers in the form of a decline in service levels and limited future development of tax compliance software.
"The ACCC conducted extensive inquiries with a range of parties, including competitors, potential market entrants, companies that use the software products as well as those that do not use the software products for their tax compliance function," Mr Samuel added.
Those inquiries indicated that Thomson Reuters and Ernst & Young are currently supplying tax compliance software to the vast majority of companies that use the software and are each other’s closest competitors.
Section 50 of the Trade Practices Act 1974 prohibits mergers and acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in a market.
The basis upon which the ACCC has reached its decision will be outlined in a Public Competition Assessment, available shortly on the ACCC's website, refer to: Public competition assessments.