ACCC will not oppose Turnitin’s proposed acquisition of Ouriginal

The decision follows the ACCC’s statement of issues released on 9 September 2021, which had highlighted the Commissions concerns that the acquisition would substantially lessen competition in the anti-plagiarism software market and signalled that the ACCC may oppose the proposed acquisition.

Turnitin, a US-based company, provides software solutions globally for the education sector, including plagiarism detection, grammar-checking, grading and online exam proctoring. It is the largest provider of anti-plagiarism software in Australia by a significant margin. Ouriginal, a Swedish-based company, also offers anti-plagiarism software with similar functions to Turnitin.

The ACCC’s preliminary view was that Ouriginal may be a “particularly innovative competitor” and could potentially develop into an important competitive constraint on Turnitin, particularly given that there may be few other competitors globally who are likely to innovate and thereby incentivise Turnitin to innovate. Accordingly, the merger would in effect be a “killer acquisition”, allowing Turnitin to entrench its market power by preventing the emergence of a challenger in the anti-plagiarism software market.

By weakening competitive constraints in the market, the ACCC warned that the proposed merger may substantially lessen competition in the market and could result in higher prices and reduced service levels for Australian higher education institutions acquiring anti-plagiarism software. Relevantly, s.50 of the Competition and Consumer Act 2010 prohibits mergers that would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

However, after a four-month informal review process, the ACCC concluded that the proposed acquisition is not likely to substantially lessen competition in any Australian market. Despite its preliminary views to the contrary, the ACCC found that Ouriginal is “unlikely to provide a particularly significant competitive constraint on Turnitin at present or in the future”.. This finding was based on the ACCC’s assessment of Ouriginal’s operations in the Australian anti-plagiarism software market. While it operates as a rival to Turnitin in countries around the world, it has a minimal presence in Australia with few customers and no Australia-based employees.

In addition, it found that the proposed acquisition would be unlikely to raise barriers of entry into the market and that other providers will be able to enter and expand in the Australian market, at least to the same extent that Ouriginal has. The ACCC concluded that other providers including Google, Microsoft and Compilatio are likely to provide a similar or greater level of competitive constraint on Turnitin as Ouriginal does currently.

On the threat to innovation, the ACCC also concluded that Ouriginal does not appear to be driving innovation in anti-plagiarism software and that Turnitin’s incentives to innovate are more likely to “continue to be driven by other international anti-plagiarism software providers.” The ACCC has previously raised concerns regarding the ability of the existing competition regime to satisfactorily address mergers and has recently introduced concrete proposals for merger reform, including to update the merger factors in s.50(3) to include new factors, such as whether the merger would increase access to, or control of, technology, data and other assets.

For more information contact Thomas Jones and Patrick Cordwell