Black Knight, ICE go headfirst against FTC

Intercontinental Exchange and Black Knight are challenging the Federal Trade Commission’s decision to halt their merger. The FTC specifically cited competition between Black Knight’s Optimal Blue’s pricing engines and the internal technology embedded within Encompass. This is in addition to the fact that both companies raise a separation-of-powers argument. “These administrative proceedings were invalid because Congress unconstitutionally delegates legislative power to the Commission by failing a provide an intelligible principal by which the Commission will exercise the delegated powers,” the Black Knight papers stated. Intercontinental Exchange’s filing contains something similar. Black Knight declined to comment beyond the information in its papers. Intercontinental Exchange, and the FTC, did not respond to a request to comment. Black Knight stated that the complaint did not address the pending sale Empower to Constellation Software. This information was made public shortly before the FTC complaint was released. The filing also raised the court ruling in favor UnitedHealth against Justice Department. This was when the Justice Department tried to stop the merger of Change Healthcare and UnitedHealth. The health care companies were able to proceed with their combination when the judge said a related divestiture was sufficient to overcome antitrust concerns and dismissed the complaint.Intercontinental Exchange said it notified the agency in December that the parties would divest Empower “in an effort to address the FTC’s misplaced concerns and move forward with the transaction. “Due to the sale and Black Knight’s falling stock price, the total compensation was reduced to $11.7 billion from the original $13.1 million. The Black Knight response stated that the FTC filed a complaint that failed to account for the divestiture’s effects rather than engaging with and considering the matter. “This divestiture preserves, if not enhances — competition in the LOS space,” the Black Knight response stated. Competition in the LOS space. “It goes on to state that even without the Empower sale the deal does no create an anticompetitive environment. Black Knight stated that “numerous LOS providers compete for business from lenders of every size and will continue doing so post-transaction.” The Intercontinental Exchange filing supports a similar argument. “Many LOS providers (e.g. Blue Sage, Byte. Calyx Finastra Fiserv, Integra Mortgage Cadence and Wipro), have won and continue to win business from lenders of all sizes,” it stated. The Encompass PPE can be used only with the loan origination software. “Separately third-party commercial PPE suppliers, including Black Knight’s Optimal blue, offer enhanced automation, PPE capabilities through LOS neutral PPE solutions that a lenders may choose to buy in addition to and integrate with their LOS,” the filing stated. Another issue raised by deal critics is that the combination of ICE Mortgage Technology units MERS, Simplifile and ICE Mortgage Technology units MERS will dominate the entire loan creation chain. Intercontinental Exchange refuted that argument. It stated that the transaction does not pose any significant vertical concerns. “Encompass’s open platform integrates with hundreds of third party vendors, many of whom offer solutions that compete with ICE. “Encompass’s open platform is integrated with hundreds of third-party vendors, many of which offer solutions that compete with ICE. Tyrell stated that even if Intercontinental Exchange purchased Ellie Mae, other pieces would be available for competitors. He specifically mentioned Optimal Blue. Tyrrell resigned from the company on March 1. Tyrrell stated that Optimal Blue, which relies heavily on them being able to distribute their products to their customers, was experiencing this. Tyrrell also said that he saw the same with Optimal Blue. “We see this with companies such as Optimal Blue,” Tyrrell said. “We will offer our own products, but we will continue to partner with lenders so they have the option of how Ellie Mae runs their business.”