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Federal antitrust regulators have moved to block Intercontinental Exchange Inc.’s pending $11.7 billion acquisition of real estate software, data and analytics provider Black Knight, saying the deal would put an end to intense competition between the two companies and drive up costs for lenders and homebuyers.
Intercontinental Exchange (ICE) owns the most popular loan origination system (LOS) used by U.S. mortgage lenders, Encompass. Black Knight owns the second-largest loan origination system, Empower.
Antitrust regulators have been scrutinizing the deal since at least last June when the Federal Trade Commission (FTC) sent ICE and Black Knight a “second request” for additional information and documents.
ICE and Black Knight had hoped to appease the FTC, announcing Tuesday that they’d reached an agreement to sell Empower to Constellation Web Solutions. The FTC shattered those hopes Thursday by launching an administrative proceeding to block the merger.
“By eliminating Black Knight as a competitor, the deal would free ICE to more aggressively raise prices that it charges mortgage lenders for origination services,” the FTC said in announcing a 4-0 vote to initiate a proceeding before an administrative law judge.
In a statement, ICE said it “strongly disagrees with, and will vigorously oppose” the FTC’s challenge.
“ICE is fully confident in our position and looks forward to presenting it in court,” the company said. “While that litigation plays out, the company is continuing its work toward closing the acquisition, which it expects to complete in the third or fourth quarter of this year.”
In its complaint, the FTC said its review of internal ICE documents revealed the use of several “levers” to grow revenue, including price…