The Australian Competition and Consumer Commission (ACCC) has raised concerns over cloud accounting software firm MYOB's proposed acquisition of GreatSoft, saying that it could "substantially" lessen competition in the accounting software market.
"We are concerned that if MYOB acquired GreatSoft, there would only be three major suppliers of practice management software to medium-to-large accounting firms," ACCC commissioner Stephen Ridgeway said.
Ridgeway believes GreatSoft has the potential to grow into a larger company, noting it has won "several medium-to-large MYOB customers".
"We received feedback that accountants now have a strong preference to move from traditional desktop-based software, like MYOB's, to online 'cloud' software," he said.
"While GreatSoft's customer base is currently small, the ACCC is investigating its potential to become a strong competitor as it appears to be a viable choice for many medium-to-large firms wishing to migrate to the cloud."
Additionally, Ridgeway said while there are alternative products in the market available, the adoption of those by medium-to-large account firms has been limited.
"It appears difficult for new competitors to enter this market. Software suppliers have to invest significant time and resources to develop functionality to meet the needs of larger accounting firms, and require a proven track record in order to convince accounting firms to switch software," he said.
"While GreatSoft itself faced some of these challenges, we consider that as it has operated in Australia for the past two years, it may now be well placed to overcome them."
MYOB first announced plans to acquire GreatSoft back in October. At the time, MYOB CEO Greg Ellis said the acquisition would fast-track the company's delivery of a cloud-based practice management solution.
"This is a significant step forward in MYOB's acceleration of cloud-based practice management solutions and will provide accounting practices with new capabilities to drive connectivity, efficiency, and security for accountants and their clients," he said at the time.
The ACCC will make its final decision on April 22. In the meantime, the consumer watchdog is inviting submissions to be made in response to the concerns it has raised about the acquisition by March 5.
Similar concerns were raised by the ACCC when MYOB announced its intention to acquire Reckon back in 2018.
At the time, the ACCC said it was concerned MYOB would gain a market monopoly as a result of a deal that was worth AU$180 million.
In the end, MYOB pulled out of the deal, citing it was not prepared to go through a long regulatory process that would take place if the acquisition went ahead.