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The company’s bid to acquire Australia’s largest provider of digital real estate forms has hit a speed bump, with the Australian Competition and Consumer Commission (ACCC) raising concerns.
The parent company of realestate.com.au has sought to acquire Dynamic Methods, operator of the only national platform for digital real estate forms.
Providing important documentation related to the lease and sale of homes, the platform partners with all of the state real estate institutes except Victoria’s on the creation and maintenance of real estate forms. In Victoria, the state institute operates a competing forms platform, while Dynamic Methods supplies its own contracts on its platform.
The national consumer watchdog has raised the alarm that given REA Group’s dominance in the real estate sector, the merger could reduce competition across the broad spectrum of real estate products in which the firm has a stake, including real estate advertising services, digital real estate forms, real estate agency software solutions and property data services.
According to ACCC commissioner Liza Carver, the agency is concerned that “by expanding REA Group’s existing ecosystem of products and services, this acquisition may extend REA Group’s already strong position and give it the ability and incentive to significantly harm competitors”.
She said that while the ACCC was not initially notified about the proposed acquisition, alarm bells had been raised by other real estate service providers.
“Many are concerned that REA Group, which operates realestate.com.au, will have the ability to control access to, and data from, digital forms which are necessary for providing real estate related services,” Ms Carver said.
On its part, REA Group said that the acquisition would not be material to the price or value of its securities and would not lessen competition in the marketplace. The group reported it is “cooperating fully with the ACCC’s inquiries”.
Regardless of the outcome of the ACCC’s investigation, this case could have further ramifications, due to the way in which the watchdog became aware of the merger.
Noting that the ACCC was not initially made aware of the deal, Ms Carver called it “yet another example of a potentially concerning merger not being notified to the ACCC under the current informal voluntary system”.
The lack of transparency, she said, highlighted “the importance of reforming Australia’s merger laws”.
A public review of the proposed deal is currently underway, with the ACCC soliciting submissions in response to its statement of issues through 1 March 2024.
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