The Federal Trade Commission has filed suit today to block the merger of CCC Information Services Inc. and Mitchell International Inc., charging that the merger would hinder competition in the market for electronic systems used to estimate the cost of collision repairs and the market for software systems used to value passenger vehicles that have been totaled, known as total loss valuation (TLV) systems.
The FTC’s administrative complaint alleges that the merger, which is valued at $1.4 billion, would harm insurers, body shops and, ultimately, U.S. car owners by reducing from three to two the number of competitors in the two related businesses.
"These estimating and valuation solutions are key tools in the auto insurance and collision repair industries," said Acting Bureau of Competition Director David P. Wales. "There is no doubt that this merger would reduce competition that benefits auto insurers and auto body shops and ultimately would lead to higher prices and less innovation for consumers."
According to the FTC, the merger of CCC and Mitchell would eliminate
head-to-head competition between the two companies and leave the
combined company with a market share of far more than half of the sales
of estimatics, and a market share of far more than half of the sales in
the market for TLV systems, creating a likelihood of adverse unilateral
effects.
The merger also would facilitate coordination among the remaining
two competitors, CCC/Mitchell and Audatex, the FTC states in its
complaint.
The Commission voted 3-0 to block the merger and will file a complaint in federal district court seeking a temporary restraining order to stop the merger pending an administrative trial. The hearing is set for March 31, 2009.
Chicago-based CCC Information Services Inc., a subsidiary of CCC
Holdings Inc., was founded in 1980 and has approximately 1,300
employees.
Mitchell International Inc., primarily owned by Aurora Equity Fund
III L.P., itself part of the Aurora Capital Group, was founded in 1946
in San Diego and has about 650 employees.
