Understanding PEXA’s Monopoly in E-Conveyancing
Property Exchange Australia (PEXA), the leader in the e-conveyancing industry, currently holds an impressive 99 per cent market share. This monopoly position, though seemingly unassailable, has been a subject of considerable controversy and debate. Here
Analysis by Nous Group
On the eve of Christmas, the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) released a cost-benefit analysis conducted by Nous Group. One of the significant findings of the report was the assertion that a monopoly outcome for the e-conveyancing market controversy could result in net benefits. Although a monopoly was not the most prosperous or the most promising of the three scenarios favorably analyzed in the report, it was viewed as a credible and perhaps probable outcome.
Is PEXA’s Monopoly a Market Failure?
However, this notion of PEXA’s monopoly as a net benefit was not left unchallenged. At a recent hearing of a New South Wales (NSW) Select Committee into e-conveyancing, two economists criticized PEXA’s market position. Rob Nicholls, a former Australian Competition and Consumer Commission (ACCC) official and current Sydney University economist, argued that PEXA’s market share does not represent a natural monopoly, but rather, it is a manifestation of market failure.
Nicholls suggested that the states and ARNECC should refer their powers to the ACCC as ARNECC was not initially established or resourced to drive competitive outcomes. He emphasized the importance of fostering competition, citing the example of Lextech, a potential new entrant that was forced to leave the market. According to Nicholls, such occurrences should not be repeated.
The E-Conveyancing Market: A Waiting Game
Andrew Nicholls, CEO of the NSW Independent Pricing and Regulatory Tribunal, shared a similar sentiment. He viewed the e-conveyancing market as a competitive market in waiting. Despite these viewpoints, Sympli, a competitor of PEXA, finds the task of challenging PEXA’s dominance a daunting endeavor. PEXA’s market position seems formidable, and they have the resources to outlast and outgun Sympli, whose burn rate is $20 million a year.
Should ACCC Intervene?
Given the current state of affairs, there is a growing sentiment that the ACCC should intervene and closely scrutinize PEXA’s market activities. The e-conveyancing market is a critical industry, and maintaining healthy competition is essential to ensure its sustainable growth. Whether PEXA’s monopoly is a market failure or a natural outcome of competitive dynamics is a question that continues to spark debate. As the industry continues to evolve, the role of regulatory bodies like the ACCC will be crucial in shaping its future direction.
