Thomson Reuters Australia's purchase of Ernst & Young's tax compliance software business, Ernst & Young Information Systems, has been opposed by the competition regulator.
"The ACCC concluded the acquisition is likely to substantially lessen competition in the markets for the supply of income tax and fringe benefits tax compliance software," ACCC chairman, Graeme Samuel, said yesterday in a statement.
The Ernst & Young business licensed out software, such as Tax Integrator and FBT Organiser, to companies who used it for their tax compliance.
In inquiries on the purchase, the ACCC discovered that Thomson Reuters and Ernst & Young are currently providing tax compliance software to the "vast majority" of companies requiring such software, the ACCC said.
The ACCC didn't think it was likely that there would be new entrants or expansion into the market, so there would be no checks to constrain Thomson Reuters from increasing its prices after the acquisition. The ACCC also didn't think that companies developing alternate systems in-house would be deterrent enough to stop the company from raising its prices.
If the parties decided to go ahead with the acquisition, the ACCC could bring legal action in the Federal Court for breach of the Trade Practices Act, which prohibits mergers and acquisitions that would likely lessen competition in the market.
