By Colin Kruger
The competition watchdog has opened an inquiry into PEXA Group, which has a monopoly over Australia’s $800 billion online property settlements industry, over allegations of anti-competitive behaviour by the company.
At a Senate estimates hearing on Thursday night, Australian Competition and Consumer Commission (ACCC) executive general manager Melinda McDonald confirmed the watchdog was looking into the matter.
ACCC chair Gina Cass-Gottlieb has criticised the process that led to PEXA being privatised as a monopoly without adequate regulation.Credit: Oscar Colman
“We are still in the process of assessing those concerns, and I wouldn’t characterise it as an in-depth investigation at this stage, but naturally, the concerns warrant further consideration,” McDonald said in response to questioning from Liberal senator Dean Smith.
The ACCC action comes after this masthead reported in July that PEXA warned the banks that they risked breaching the company’s intellectual property rights if they co-operated with the sector’s regulator, the Australian Registrars’ National Electronic Conveyancing Council (ARNECC), to overcome interoperability issues and open the door to competition.
“During the interoperability reform process, a number of concerns have been raised with the ACCC that PEXA may be engaging in anti-competitive conduct, including by allegedly delaying the reform process. As each of these issues are raised, we consider them carefully and respond. As this work is ongoing, it is inappropriate to comment further,” an ACCC spokesman said.
A PEXA spokeswoman said on Friday: “To date, we have not received any inquiries from the ACCC regarding an investigation. PEXA is committed to collaborating with the ACCC, ARNECC, state registrars and relevant stakeholders on competition reform, and we will remain actively engaged throughout the process.”
PEXA processes the conveyancing of every property transaction in Australia that is handled electronically.Credit: Peter Rae
A recent NSW Productivity Commission report said PEXA had captured, at “above normal profits”, most of the $89 million in annual productivity benefits generated from Australia’s conveyancing going from paper-based to electronic.
At Senate estimates on Thursday, ACCC chair Gina Cass-Gottlieb criticised the process by which PEXA was privatised as a monopoly without adequate regulation in place.
“Before there is a privatisation that confers a private new monopoly, it is very important to have sufficient regulatory framework,” she said.
Smith said he would pursue the issue further.
“We will continue to shine a light on sectors where competition can be improved and await the outcome of the ACCC’s assessment with great interest,” the senator said.
The allegations of anti-competitive behaviour arose last year when ARNECC requested specific information from the banks on the functions provided by PEXA, which is valued at $2.5 billion and is the only provider of e-conveyancing transactions, now accounting for 88 per cent of property transfers in Australia and 99 per cent of refinanced mortgages.
PEXA chief commercial officer Les Vance wrote to the banks, via the Australian Banking Association, saying: “We appreciate you have and should continue to advise the regulator on the outcomes you are seeking in an interoperable regime and the gaps in functionality of which you are concerned.
“However, PEXA has intellectual property rights over those important functions that we have developed in consultation with our lending institution customers over the past decade. It is not reasonable that you are being asked to outline the functionality of those systems to the regulator, especially as this could lead to disclosure of our company’s intellectual property.”
PEXA asked the banks to refer the regulator back to PEXA on the queries.
The following month, the banks cancelled a meeting with PEXA’s rival, the ASX-backed Sympli, due to the uncertainty over whether they could discuss information that PEXA was claiming as its own intellectual property.
Interoperability would allow the parties involved in settling a property transaction – lawyers, conveyancers and banks – to use any service provider, instead of having to use PEXA, which was originally a venture between Australia’s largest banks and various state governments. It was privatised in 2019.
In June, ARNECC, the conveyancing regulator, effectively abandoned plans to introduce competition next year after state ministers said some of the intended reforms needed federal intervention. The e-conveyancing sector is expected to generate fees totalling $430 million in the 2025 financial year.
PEXA had warned the regulator in July last year that it was now a public company and its assets were “no longer available for government bodies to disburse” without compensation.
“It is incorrect to make a blanket assumption that exchange of these additional data would not infringe PEXA IP rights,” the ASX-listed group said.
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