FTC Files to Block Merger of Software Companies

(CN) - The Federal Trade Commission filed last week to stop the merger of two software companies, citing a potential loss in competition and an already highly concentrated market. The companies sell software that quickly calculates auto-repair costs to insurance companies.

"We have sufficient reason to intervene in the merger," said FTC spokesman Peter Kaplan. "The Clayton Act states that a merger must substantially lessen competition, or tend to create a monopoly for us to intervene."

The merging of Chicago-based CCC Informative Services Inc. and San Diego-based Mitchell International Inc. would leave only one other company, Aduatex, in the market.

Together, CCC and Mitchell already control the vast majority of software sales to auto-insurance companies. If the merger goes through, the resulting two competitors could more easily negotiate deals with each other and there would be a substantial loss of competition.

The FTC claims this loss of competition would lead to increased expenses for auto-insurers, repair shops, and ultimately car owners.

In its guide to anti-trust laws, the FTC emphasizes the importance of stopping mergers before they happen, since it avoids the difficult "unscrambling of the eggs" once an anti-competitive merger has happened.

The companies both produce total loss valuation systems and estimatics. A TLV system is a program which accesses a database of vehicle information on recent auto-sales throughout the United States, providing recent, actual, and local market values. This information allows insurers to accurately and quickly calculate the value lost when a car is totaled.

Estimatics accesses a database of car-part prices and repair times so that a mechanic can enter details about a car's damage into a computer to retrieve an accurate and quick calculation of the repair cost.

The FTC is seeking a preliminary injunction.

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