The Australian Competition and Consumer Commission (ACCC) has knocked back the sale of Ernst & Young’s tax compliance software business to media and information company Thomson Reuters.
The decision is likely to be a blow to Thomson Reuters' plans for the segment, as together with Ernst & Young, the two companies dominate the local tax compliance software market, according to the ACCC.
Explaining the competition regulator’s decision, ACCC chairman, Graeme Samuel, said the acquisition of Ernst & Young’s tax compliance software business, which includes the Tax Integrator and FBT Organiser products, was likely substantially lessen competition in the markets for the supply of income tax and fringe benefits tax compliance software.
The prospect of new entry or expansion of the remaining competitors was also unlikely, the ACCC concluded, thus there would be few constraints on Thomson Reuters increasing software prices post-acquisition.
The ACCC added that it had received evidence that the ability for companies to develop their own in-house solutions was limited, further adding to the likelihood of increased prices.
A decline in service levels and limited future development of tax compliance software was also expected if the acquisition were to go ahead, the ACCC said.
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.
Thompson Reuteurs, best known for its news service, also offers enterprise business automation software, investment and advisory tools, healthcare & science, legal, and sales & trading software.
Its tax and accounting business already includes the Checkpoint , CS Professional Suite , PPC brands.