MYOB's proposed GreatSoft buyout hits ACCC hurdle

Australia’s competition watchdog has raised concerns that MYOB’s proposed acquisition of GreatSoft could lead to reduced competition in the practice management software market.

Last October MYOB announced its intention to acquire GreatSoft to “fast-track” its cloud-based practice management solution offering.

The deal would see MYOB integrate GreatSoft’s cloud-based practice management software with its suite of accounting software solutions, subject to ACCC approval.

But the proposal has now hit a roadblock, with the ACCC on Thursday questioning the impact of the acquisition on the practice management software market for medium-to-large customers.

The regulator said the acquisition could “substantially lessen competition in the account software market” by resulting in only three major suppliers of practice management software.

Other competitors include Reckon APS – which MYOB previously attempted to acquire – and Xero Practice Manager, both of which have many medium-to-large customers.

“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,” commissioner Stephen Ridgeway said.

“GreatSoft is a new entrant that has won several medium-to-large MYOB customers, and we are looking into its potential to grow stronger.

“We received feedback that accountants now have a strong preference to move from traditional desktop-based software, like MYOB’s, to online ‘cloud’ software.

“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.”

Ridgeway added that medium-to-large firms required “more sophisticated features from practice software”, making it “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.”

The ACCC has asked interested parties to respond to a statement of issued about the proposed deal before March 5.

A final decision on the acquisition is scheduled for April 22.