FTC sues to cease ICE-Black Knight merger

The Federal Commerce Fee (FTC) on Thursday sued to dam the proposed $13 billion merger between Intercontinental Alternate Inc. and rival mortgage software program agency Black Knight.

The merger would give ICE and Black Knight a major place out there for mortgage origination software program, which it might use to push clients to its different mortgage companies and merchandise as a substitute of rivals’ choices, the company argued. It additionally claimed a merger would stifle innovation and cut back lenders’ decisions for each origination and mortgage servicing.

The FTC voted 4-0 to file the criticism within the company’s in-house court docket.

“For a lot of Individuals, shopping for a house is a crucial funding towards constructing monetary safety,” stated Patty Brink, the performing deputy director of the FTC’s Bureau of Competitors. “This deal would cut back competitors in key areas of the mortgage course of, finally elevating prices for lenders and homebuyers. The FTC will intervene when unlawful mergers threat harming competitors in such vital markets.”

The transfer, which was broadly anticipated, units the specter for a authorized problem between Atlanta-based ICE and the federal authorities.

“ICE is absolutely assured in our place and stay up for presenting it in court docket,” the corporate stated in a statement Thursday. “Whereas that litigation performs out, the corporate is continuous its work towards closing the acquisition, which it expects to finish within the third or fourth quarter of this yr.”

ICE and Black Knight this week introduced that they’d agreed to promote Empower, Black Knight’s LOS, to Canadian software program firm Constellation Software program, although the deal is contingent on the merger going by means of. The 2 firms additionally amended their deal phrases to scale back the valuation of Black Knight to $11.8 billion, about 11% decrease than the valuation when the settlement was introduced final yr. 

Empower instructions about 10 to fifteen% market share, a distant second to ICE’s Embody LOS, which is estimated to have about 40 to 45% market share.

Relating to that proposal to promote Empower, the FTC stated it “doesn’t tackle the anticompetitive results out there for PPE software program and wouldn’t substitute the extreme competitors between ICE and Black Knight within the LOS market.”

ICE is the proprietor of the New York Inventory Alternate and has appeared to diversify its enterprise by means of mortgage.

“We’re disenchanted that the FTC has filed litigation to stop ICE from closing our acquisition of Black Knight,” Tim Bowler, president of ICE Mortgage Expertise, stated in an announcement. “The proposed acquisition can carry to life a real end-to-end resolution for the mortgage business, benefitting aspiring and present householders throughout america.”

Scott Olson, the top of the Group Residence Lenders Affiliation, a commerce group for smaller mortgage lenders, cheered the FTC’s lawsuit.

“CHLA strongly commends the FTC for taking authorized motion to dam the acquisition of Black Knight by ICE,  confirming what we have now stated all alongside – which is that the acquisition would ‘hurt competitors and result in increased prices for lenders and homebuyers,” he stated in an announcement.