The Federal Trade Commission has approved CoreLogic Inc.'s acquisition of DataQuick Information Systems Inc. on the condition that CoreLogic license its property value data to a new entrant in the market for national assessor and recorder bulk data for properties in the United States. This case demonstrates how, in unusual circumstances, the FTC is willing to consider remedial tools other than a divestiture of assets to address its concerns about the potential anticompetitive effects of a transaction.
CoreLogic is a property information company. It licenses national assessor and recorder bulk property data used to perform internal analyses and to create value-added products such as risk and fraud management tools. DataQuick, one of CoreLogic's primary competitors, obtained historical national assessor and recorder bulk data through a prior acquisition in 2004 and has obtained ongoing data primarily through a license with CoreLogic. In July 2013, CoreLogic agreed to purchase DataQuick for $661 million from a private equity firm.
On March 24, 2014, the FTC issued a complaint that alleged the proposed acquisition would substantially lessen competition in the market for national assessor and recorder bulk data in violation of Section 5 of the FTC Act and Section 7 of the Clayton Act. According to the complaint, the proposed acquisition would greatly decrease competition in that market by combining two of only three companies that provide national assessor and recorder bulk data about properties in the United States. The FTC argued that DataQuick is an aggressive competitor, offering lower prices and less restrictive contract terms than its competitors. Finally, the FTC concluded that entry or expansion into the market for national assessor and recorder bulk data is unlikely due to high barriers to entry, citing the high cost of obtaining historical data and collecting new data and the low incentive for companies to license data to potential entrants.
CoreLogic has agreed to settle the litigation. To resolve the FTC's concerns, CoreLogic agreed to license historical national assessor and recorder bulk data and new data to Renwood RealtyTrac LLC, without any limitations for up to seven years following the acquisition. RealtyTrac is an online foreclosure listings market and national foreclosure data service that maintains, collects, and licenses foreclosure data for properties in the United States. According to the FTC, RealtyTrac has the "relevant industry experience, reputation, and resources" to enter the relevant market successfully with a license from CoreLogic. Pursuant to the consent order, CoreLogic must provide the same scope and quality of property value data to RealtyTrac as is currently licensed to DataQuick, putting RealtyTrac in the same competitive position as DataQuick prior to the acquisition. The consent order also requires DataQuick to give its customers the option of terminating their agreements with DataQuick in order to purchase or license data from RealtyTrac. According to the FTC, the consent decree enables RealtyTrac to offer customers the same data and services that DataQuick is currently selling in the market, thereby replacing the competition lost due to the transaction.
The CoreLogic settlement demonstrates that the FTC does on occasion accept narrowly tailored, more creative remedies as a way for parties to avoid divesting assets to resolve a merger challenge. Both the FTC and the Antitrust Division of the Department of Justice prefer such structural remedies to "fix" loss of competition due to a combination of competitors. While the FTC specifically acknowledges compulsory licensing as an alternative structural remedy in its Negotiating Merger Remedies guidelines, as a practical matter licensing as a remedy is rare. In the CoreLogic case, the parties convinced the FTC that the licensing was an effective remedy because DataQuick, the acquired company, previously offered data and services only pursuant to a license from CoreLogic. By providing a similar license to RealtyTrac, the consent decree enables RealtyTrac to become an effective competitor in the market for national assessor and recorded bulk data, maintaining the pre-transaction competition offered by DataQuick.
The Commission's 4-0 vote to approve the settlement is open for public comment through April 23. The FTC's complaint and proposed consent order can be found here.