ACCC becomes the proposed acquisition of Ouriginal. not refuse by Turnitin

On November 25, 2021, the Australian Competition and Consumer Commission (“ACCC“) Announced that Turnitin, LLC will not be through Turnitin UK Ltd. (“Turnitin“), Intended takeover of Ouriginal Group AB (“original“).

The decision follows ACCC’s statement of facts published on September 9, 2021, which highlighted the Commission’s concerns that the acquisition would significantly reduce competition in the anti-plagiarism software market and signaled that ACCC completed the proposed acquisition could refuse.

Turnitin, a US-based company, provides software solutions for the education sector worldwide, including plagiarism detection, grammar checking, grading and online exam monitoring. It is by far the largest anti-plagiarism software provider in Australia. Ouriginal, a Swedish company, also offers anti-plagiarism software with functionality similar to Turnitin.

The ACCC’s preliminary view was that Ouriginal could be a “particularly innovative competitor” and potentially become an important competitive pressure on Turnitin, especially given that there may be few other competitors in the world who are likely to innovate and In this way, Turnitin can set incentives for innovations. Accordingly, the merger would be a de facto “killer acquisition” that would allow Turnitin to consolidate its market power by preventing a challenger from emerging in the anti-plagiarism software market.

By easing the restraints of competition in the market, ACCC warned that the proposed transaction could significantly reduce competition in the market and result in higher prices and reduced services for Australian higher education institutions purchasing anti-plagiarism software. Relevant from 50 the Competition and Consumer Act 2010 prohibits mergers that have, or could have the effect of, a significant reduction in competition in a market.

However, after a four month informal review process, the ACCC concluded that the proposed acquisition will not materially affect competition in any Australian market. Despite its tentative opposing views, the ACCC stated that Ouriginal “is unlikely to exert particularly significant competitive pressure on Turnitin either now or in the future.” This finding was based on the ACCC’s assessment of Ouriginal’s activities in the Australian anti-counterfeit software market. While rivaling Turnitin in countries around the world, it has a minimal presence in Australia with few customers and none based in Australia Employees.

In addition, it determined that the proposed acquisition would likely not raise any barriers to entry and that other vendors will be able to enter and expand in the Australian market, at least to the same extent as Ouriginal. The ACCC concluded that other vendors, including Google, Microsoft, and Compilatio, are likely to exert similar or greater competitive pressures on Turnitin as Ouriginal is currently doing.

Regarding the threat to innovation, the ACCC also concluded that Ouriginal does not appear to be promoting innovation in anti-plagiarism software and that Turnitin’s incentives to innovate tend to “continue to be driven by other international anti-plagiarism software providers”. The ACCC has previously raised concerns about the ability of the existing competition regime to treat mergers satisfactorily and has recently made specific proposals for merger reform, including updating the merger factors in Section 50 (3) to include new factors, e.g. merger would gain access to increase or control technology, data, and other assets.

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