The Australian Competition and Consumer Commission (ACCC) has highlighted concerns with MYOB's proposed acquisition of Reckon's Accountant Group for AU$180 million, fearing the former might gain a market monopoly as a result.
The ACCC's preliminary view is that the proposed acquisition is likely to substantially lessen competition in the supply of practice software to medium and large accounting firms, the ACCC's Statement of Issues [PDF][1] explains.
"The ACCC understands that medium to large accounting firms require more sophisticated features from practice software, reflecting larger sizes, more complex structures and processes, and more diverse needs of their clients," the ACCC wrote.
"Market feedback indicates that for those firms, the MYOB AE and Reckon APS products are generally considered to be the only options available.
"Market feedback indicates that practice software products from other suppliers are mainly designed for smaller accounting firms and do not provide many of the more sophisticated features generally required by medium to large firms."
Additionally, ACCC Commissioner Roger Featherston said that if MYOB has a monopoly on such software, it would substantially lessen competition.
"We think there's a significant risk for customers that prices will increase and service levels will decrease," he added.
"There are other suppliers of this software, but market feedback suggests those products are less sophisticated, and that they are unlikely to be able to develop the more advanced functionality for several years at least."
Featherston also highlighted that the ACCC had identified several barriers to expansion for other competitors, including the time and cost to develop better functionality, switching costs for accounting firms, and a "cautious approach from the industry towards changing to untested suppliers".
Where smaller firms are concerned, the ACCC