Washington, DC - The Federal Trade Commission has challenged Verisk Analytics, Inc.’s proposed $650 million acquisition of EagleView Technology Corporation, alleging that it would likely reduce competition and result in a virtual monopoly in the U.S. market for rooftop aerial measurement products used by the insurance industry to assess property claims.
The FTC issued an administrative complaint against the two companies, alleging that the acquisition would violate U.S. antitrust law. The agency also authorized staff to seek a temporary restraining order and preliminary injunction in federal court to maintain the status quo pending an administrative trial on the merits.
“EagleView is the dominant company and Verisk is the only meaningful competitor offering rooftop aerial measurement products to insurance carriers,” said Deborah Feinstein, Director of the Bureau of Competition. “Verisk’s entry into the market has provided a lower-priced alternative to customers. If this transaction goes through, insurance carriers, and ultimately consumers, face the risk of higher prices.”
According to the FTC’s complaint, damage to rooftops accounts for more than a third of all property insurance claims in the United States. Insurance carriers need roof measurements to calculate the costs associated with replacing or repairing rooftops. Until 2008—when EagleView first offered its roof reports using proprietary software to analyze aerial images—insurance adjusters climbed roofs to measure the perimeter, slope, and other dimensions by hand. Today, insurance carriers use rooftop aerial measurement products for several reasons, including because they are safer, faster, and more accurate than traditional manual measurement.
The Commission alleges that the challenged acquisition would combine the only two significant competitors for rooftop aerial measurement products for insurance purposes in the United States. EagleView dominates the market, serving most of the top 25 insurance carriers. Verisk offers two roof measurement products, which together pose the only meaningful competition to EagleView. According to the complaint, absent the acquisition, Verisk is in the best position to continue competing with EagleView based on product quality; ownership of the dominant software platform through which insurance carriers process roof damage claims and other property claims; ability to defend against claims of patent infringement; and existing relationships with insurance carriers.
The complaint also alleges that other providers of rooftop aerial measurement products are distant competitors to Verisk and EagleView. These providers, and other potential providers, face significant barriers and are unlikely to reposition or expand their business. Entrants also face likely claims of patent infringement from EagleView, which has aggressively asserted its patent rights against most of its actual and potential competitors, according to the complaint.
The complaint alleges that the proposed acquisition also would eliminate the close competition created by Verisk’s efforts to gather its own higher-quality aerial imagery, to provide more accurate rooftop aerial measurements, and to make other improvements to its product line. According to the complaint, large insurance carriers now benefit from price competition between the two companies that would be eliminated if the acquisition proceeds.
The Commission vote to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction in federal district court was 5-0. The administrative trial is scheduled to begin on May 19, 2015.