Mar 9, 2023
FTC Votes to Block ICE-Black Knight Deal, Citing Higher Prices for Home Buyers
(Bloomberg) -- The Federal Trade Commission sued to block Intercontinental Exchange Inc. proposed acquisition of mortgage software rival Black Knight Inc. Thursday, alleging the tie-up would raise prices for mortgage lenders and home buyers.
The FTC said the deal would give ICE and Black Knight a significant position in the market for loan origination software, which lenders use to manage their workflow for home loans. The combined company would also have the incentive to use its dominance to push customers to use its other mortgage services instead of those offered by rivals, the FTC said.
The agency voted 4-0 to file the complaint in the agency’s in-house court. A copy of the complaint wasn’t immediately available.
“For many Americans, buying a home is an important investment toward building financial security,” Patty Brink, acting deputy director of the FTC’s Bureau of Competition, said in a statement. “This deal would reduce competition in key areas of the mortgage process, ultimately raising costs for lenders and home buyers.”
In a statement, ICE said it would “vigorously oppose” the FTC’s complaint.
“We are disappointed that the FTC has filed litigation to prevent ICE from closing our acquisition of Black Knight,” said Tim Bowler, president of ICE Mortgage Technology. “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.”
ICE owns mortgage software company Ellie Mae Inc., whose Encompass platform is the most widely used for loan origination. Black Knight’s Empower is the second-biggest player in that market. In an effort to resolve the FTC’s antitrust concerns, the companies said Tuesday they would sell Black Knight’s Empower business to Constellation Software Inc., a divestiture that reduced the overall deal value to $11.7 billion. The FTC said divesting the Empower business wasn’t enough to replace the “intense competition” between ICE and Black Knight.
Both companies offer a number of other mortgage products. ICE owns the Mortgage Electronic Registration Systems, or MERS, the national database that tracks mortgage servicing rights. Black Knight’s MSP is the largest mortgage servicing platform, controlling about 56% of the market, while its Optimal Blue helps lenders and brokers price mortgages.
ICE and Black Knight announced the deal in May in a bid to create a platform that helps lenders throughout all stages of a mortgage from a customer’s initial home search through loan servicing and potential default. They have sought to downplay any overlaps, telling investors that ICE and Black Knight offer “complementary businesses that service different parts of the mortgage ecosystem.”
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