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Canada Probes Dye & Durham for Alleged Anti-Competitive Practices

By  |  November 7, 2024

Shares of Dye & Durham fell sharply on Thursday following news that Canada’s Competition Bureau is launching an investigation into the company’s business practices. The regulator has expressed concerns about potential anti-competitive conduct and has obtained a court order from the Federal Court of Canada to facilitate its inquiry, according to MarketWatch. As a result, Dye & Durham’s shares declined by 6.2%, closing at 18.51 Canadian dollars ($13.28).

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    The Competition Bureau announced that the court order would compel Dye & Durham, which provides software for legal professionals involved in residential real estate transactions, to supply necessary information as part of its investigation. The probe aims to determine if the company’s business practices violate Canada’s restrictive trade laws, including the abuse of a dominant position in the market. Such a finding could have serious implications for the software firm, which has grown rapidly through aggressive acquisitions in recent years.

    This regulatory challenge comes amid broader scrutiny of Dye & Durham’s financial strategy. According to MarketWatch, the company is also dealing with pressure from activist shareholders who argue that management’s priorities have led to financial instability. Shareholders have raised concerns that, instead of reducing its significant debt, the company has continued to invest heavily in acquisitions.

    One of the company’s most vocal shareholders, Engine Capital, holds a 7.1% stake and has publicly called for changes at the executive level, stating that a management overhaul would better serve the company’s long-term interests. Engine Capital has also proposed an alternative slate of board candidates, expressing confidence that its nominees would be more effective at steering the company away from costly acquisitions and focusing on stabilizing its finances. The activist investor has been critical of a rumored sale of the company, arguing that a new management team would better address Dye & Durham’s challenges without resorting to such a measure.

    Source: MarketWatch