The U.S. Federal Trade Commission said March 9 it is filing an administrative complaint to block Intercontinental Exchange Inc.’s acquisition of Jacksonville-based Black Knight Inc.
“This deal would reduce competition in key areas of the mortgage process, ultimately raising costs for lenders and homebuyers. The FTC will intervene when illegal mergers risk harming competition in such critical markets,” said Patty Brink, acting deputy director of the FTC’s Bureau of Competition said in a news release.
ICE is best known as the operator of the New York Stock Exchange but it also has a mortgage technology division that includes the dominant loan origination system in the U.S., the FTC said.
Black Knight’s biggest business is processing existing mortgage loans but it also has the second-largest mortgage loan origination system, called Empower, the FTC said.
The agency also said the merger would harm competition for product pricing and eligibility engines, or PPEs, which are add-ons to loan origination software that lenders use to find the best interest rates for home buyers.
Black Knight and ICE announced an agreement March 7 to sell Empower to satisfy the FTC’s antitrust concerns about the merger.
However, the FTC said in the news release “the proposal does not address the anticompetitive effects in the market for PPE software and would not replace the intense competition between ICE and Black Knight in the loan origination software market.”
ICE said in a March 9 news release it will continue to work to complete the merger and will challenge the FTC’s action in court.
“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’s mortgage technology business, in the release.
”The proposed acquisition can bring to life a true end-to-end solution for the mortgage industry, benefitting aspiring and current homeowners across the United States,” he said.
ICE agreed to buy Black Knight in May 2022 in a deal valued at $13.1 billion.
When the companies announced the agreement to sell Empower, they also announced new terms for the deal that reduced the value to $11.7 billion.