The U.S. Federal Trade Commission on Thursday said it would take action aimed at stopping New York Stock Exchange parent Intercontinental Exchange from acquiring mortgage data vendor Black Knight in a $13.1 billion deal.
The agency said the proposed deal would mean higher fees, less innovation and fewer choices in the process of financing the purchase of a home.
“This deal would reduce competition in key areas of the mortgage process, ultimately raising costs for lenders and homebuyers,” said Patty Brink, acting deputy director of the FTC’s Bureau of Competition.
The FTC voted 4-0 to bring an administrative complaint.
ICE said in a statement that it would “vigorously oppose” the FTC action.
“The proposed acquisition can bring to life a true end-to-end solution for the mortgage industry, benefiting aspiring and current homeowners across the United States,” said Tim Bowler, president of ICE Mortgage Technology.
Under President Joe Biden, who has promised tougher antitrust enforcement, the FTC has sued to stop an unusually large number of deals, and many companies terminated their transactions without a fight. One exception was Facebook parent Meta, which battled the FTC over its plan to buy virtual reality company Within Unlimited. The court ruled for Meta and the FTC dropped its opposition.
The ICE deal for Black Knight, which was announced in May, prompted worries from the beginning that it could raise costs for consumers by giving ICE too much pricing power in the mortgage data market that lenders rely on.
Black Knight, which provides software, data and analytics to the real estate and housing finance markets, is the latest in a string of deals undertaken by ICE since 2016 to support its mortgage-servicing business as it bets on a windfall from automation of the home financing process.
In 2020 ICE, in an $11-billion deal, purchased Ellie Mae, a cloud-based platform that supports all aspects of mortgage origination. That followed a $335-million deal for Simplifile in 2019, and the acquisition of MERS, in which ICE took a majority stake in 2016 and bought outright in 2018.
In February, Reuters reported that Black Knight had decided to put its Empower loan origination software business up for sale in a response to U.S. antitrust concerns.
The FTC said in a statement that the proposed asset sale was inadequate to address the harm that the transaction would do.
The Community Home Lenders Association, which opposed the deal, has argued that Empower and ICE’s Encompass unit are the top two vendors for loan origination software, jointly controlling upwards of 60% of the market.
Source: Reuters.com