FTC Secures Settlement with ICE and Black Knight Resolving Antitrust Concerns in Mortgage Technology Deal

The Federal Trade Commission today approved a proposed consent order to resolve antitrust concerns surrounding Intercontinental Exchange, Inc.’s (ICE) proposed $13.1 billion acquisition of Black Knight, Inc. The proposed settlement ensures Black Knight’s divestiture of Empower and Optimal Blue, two businesses that provide critical services in the mortgage origination process. The FTC also secured other concessions to promote the success of the divested businesses.

The proposed consent order settles FTC charges that ICE’s deal with Black Knight, which combines the two top mortgage technology providers, would drive up costs, reduce innovation, and limit lenders’ choices for mortgage origination tools.

“This deal as originally structured would have reduced competition in key areas of the mortgage origination process, raising costs for lenders and homebuyers,” said Henry Liu, Director of the FTC’s Bureau of Competition. “To address these concerns, the Commission’s order provides structural relief and a variety of tools to preserve competition in these critical markets.”

Under the terms of the proposed order, Black Knight’s Optimal Blue business and Empower business, along with certain related products, will be divested to Constellation Web Solutions Inc. (Constellation), a provider of mortgage-related tools and software. To ensure the success of these divestitures, ICE and Black Knight are required to maintain the viability of the businesses until they are successfully divested to Constellation, and to provide transition assistance to enable Constellation to operate the businesses along the same lines that Black Knight has operated them.

The proposed consent order also requires ICE and Black Knight, for the next 10 years, to seek prior approval from the FTC before either reacquiring any divested asset or acquiring an interest in a loan origination system (LOS) business. It also requires the companies to provide prior notice to the FTC before acquiring an interest in a product, pricing, and eligibility engine (PPE) business for that same period.

The proposed consent order contains additional requirements. For example:

• Constellation would receive a license to resell with Empower certain other Black Knight mortgage-related products and services that would be acquired by ICE.
• For one year, ICE and Black Knight must facilitate Constellation’s hiring of certain employees not already included in the divestitures who have responsibilities for the divested products and businesses.
• ICE and Black Knight are prohibited from enforcing any noncompete or non-solicit provision or agreement against any employee who seeks or obtains a position in the divested businesses.
• ICE and Black Knight will transfer a promissory note used to finance Constellation’s purchase of the Optimal Blue business to a trustee, who will be responsible for selling the note within six months of the divestiture.
• A monitor will be appointed to oversee compliance with the proposed consent order.

In March 2023, the FTC voted unanimously to issue an administrative complaint challenging ICE’s proposed acquisition of Black Knight. Black Knight’s Empower is the country’s second largest LOS, which allows lenders to manage workflows when originating a mortgage. Black Knight’s Optimal Blue business provides tools used throughout the life of a mortgage, including the country’s dominant PPE, a software used to identify and secure loan rates when generating a mortgage. Lenders strongly prefer to use a PPE that integrates with their LOS.

The FTC’s administrative complaint alleged that the proposed deal would combine Black Knight’s Empower with ICE’s Encompass, the dominant LOS in the country, and Black Knight’s Optimal Blue PPE with its largest rival, ICE’s Encompass Product and Pricing Service PPE. The administrative complaint further alleged that the proposed acquisition would make it more likely that ICE would limit rival PPE providers’ access to ICE’s dominant Encompass LOS. The FTC alleged the proposed acquisition would allow ICE to raise costs to lenders, resulting in higher fees to homebuyers.

Prior to the FTC issuing its administrative complaint, ICE and Black Knight announced a deal to divest Empower and certain related products to Constellation. The FTC’s administrative complaint charged that this divestiture did not fully resolve the potential anticompetitive impacts of ICE’s proposed transaction with Black Knight.

In April, the FTC filed suit in the U.S. District Court for the Northern District of California to prevent ICE from consummating the Black Knight transaction pending the outcome of the Commission’s administrative challenge. In July, after several months of litigation, ICE and Black Knight announced a deal to also divest Black Knight’s Optimal Blue business to Constellation.

Following this announcement, the FTC, ICE, and Black Knight made significant progress toward a potential resolution of the administrative proceeding and, in August, jointly agreed to dismiss the federal case without prejudice.

The Commission vote to accept the consent agreement for public comment was 3-0. Further details about the proposed consent order can be found in the analysis to aid public comment. The FTC will publish the consent agreement package in the Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.

NOTE: When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.