Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Mortgage product pricing engine provider charged with monopolizing integrated CRM mortgage market, (Aug 20, 2014)

By Linda O’Brien, J.D., LL.M.

A provider of product eligibility and pricing services to mortgage lenders has engaged in anticompetitive conduct by using its monopoly power to leverage a monopoly position in the market for integrated customer relationship management systems, according to a complaint filed in the federal district court of Plano, Texas (Vantage Production, L.L.C. v. Optimal Blue, L.L.C., August 18, 2014).

Optimal Blue provides managed content, enterprise lending services to mortgage lenders, including product eligibility and pricing (PPE) services that allow loan officers to efficiently select mortgage products suitable to prospective borrowers. Vantage Production is a provider of advanced customer relationship management (CRM) systems for mortgage lenders, which allows loan officers to eliminate unnecessary or redundant activities from the process of selling mortgages.

The complaint states that, in May 2013, Vantage and Optimal Blue entered into an agreement to integrate their products under which Optimal Blue would provide Vantage with a software development kit (SDK) containing instructions for accessing and exchanging data with its product, free of charge. As the integration project progressed, Vantage shared with Optimal Blue its proprietary list of prospective customers, and Optimal Blue provided Vantage with the credentials necessary to access its system. In April 2014, Optimal Blue requested that Vantage demonstrate the Vantage platform, integrated with the Optimal Blue product and pricing engine, for its account managers, support, and sales team.

In reliance on Optimal Blue’s representations and course of conduct in undertaking the development to integrate the products, Vantage began marketing to customers its CRM solution with the ability to integrate with Optimal Blue’s PPE. The marketing and sales efforts were undertaken by Vantage with Optimal Blue’s knowledge, understanding, and active participation. Based on its marketing efforts, Vantage entered into at least 13 contracts for different loan originators, which expressly obligated Vantage to deliver its CRM product that was capable of integrating with Optimal Blue’s PPE, and has approximately 12 other proposals in negotiation. Additionally, Vantage gained additional customers and market share, the complaint alleged.

According to the complaint, in July 2014, after the integration was substantially complete, Vantage actively marketed its CRM integrated platform, Vantage executed contracts with customers to deliver its platform, and Optimal Blue demanded that Vantage pay a substantial percentage of its entire revenue to integrate with Optimal Blue’s PPE. Optimal Blue allegedly sought these supra-competitive fees in order to drive Vantage from the integrated CRM mortgage market and gain control of Vantage’s significant market share.

Although Vantage attempted to reach a business solution so that mutual customers would not be prejudiced, Optimal Blue refused. Optimal Blue blocked all access for Vantage to Optimal Blue’s products. As a result, Vantage cannot deliver under the contracts that it has executed with customers, which are now delayed and in jeopardy of termination. Moreover, if Vantage agrees to pay the supra-competitive fee and not pass along the excess costs to customers, the company will go out of business, the complaint charges.

Optimal Blue had the largest revenues of all participants in the PPE mortgage market and, through acquisition and business acumen, has garnered a market share in excess of 60 percent. The unequal position in which Vantage finds itself poses an actual risk to the company due to Optimal Blue’s dominant market position and that Optimal Blue has integrated its product with Vantage’s major competitors on dissimilar terms.

Vantage asserts claims for violations of Section 2 of the Sherman Act. The action seeks injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 4:14-cv-00546-DDB.

Attorneys: Gregory J. Casas, Christopher M. LaVigne, and Paul J. Brown (Greenberg Traurig, LLP).

Companies: Vantage Production, L.L.C.; Optimal Blue, L.L.C.

News: Antitrust TexasNews