(Bloomberg) -- Dye & Durham Ltd. shares fell about 18%, the most in over a year, after Canada’s Competition Bureau obtained a court order to investigate alleged anti-competitive conduct at the legal and business software company.
The probe is focused on Dye & Durham’s conveyancing software used in residential real estate transactions. The court order means the competition watchdog can now compel the company to produce records, and it also invited market stakeholders to submit information, according to a statement Thursday.
Dye & Durham said in a separate statement that it’s cooperating fully, that the investigation doesn’t restrict its business operations, and that the software industry is highly competitive and regularly disrupted.
The company also said it’s concerned the bureau may be acting on allegations from rivals “who have resisted productivity-enhancing innovation,” and that some of the regulator’s filings “improperly contextualize commercial relationships and standard software industry and data-services business practices such as subscription and contract terms, discounted pricing, and product suite offerings.”
The investigation stands to complicate the board’s efforts to examine takeover bids and other potential transactions. Thursday’s drop took the shares down to C$16.22 as of 1:11 p.m. in Toronto, erasing more than C$200 million from the firm’s value and leaving it with a market capitalization just below C$1.1 billion.
Dye & Durham is working with advisers on a review that could include a sale or other transactions, it said last month, confirming a report by Bloomberg. The firm has hired Goldman Sachs Group Inc. to field interest from possible bidders, including US-based private equity and strategic suitors.
Dye & Durham has also been targeted by activist investor Engine Capital LP, which owns about 7.1% of the shares and this week nominated six candidates to its board in an effort to boost its valuation.
Keldon Bester, executive director of the Canadian Anti-Monopoly Project, said by email that the probe is a good example of using competition law to tackle hidden practices that drive up the cost of living.
“Real estate conveyance software rarely makes headlines but conduct in this market that reduces competition squeezes both legal professionals” and their customers, Bester said.
--With assistance from Geoffrey Morgan.
(Updates share movement, adds quote from executive director of competition think tank.)
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