In March 2017, Alarm.com completed its acquisition of two business units (Connect and Piper) from Icontrol Networks, with the remainder of Icontrol sold to Comcast. Prior to the acquisition, both Alarm.com and Icontrol were active in the sale of SHaaS (smart home as a service) software platforms that integrate professionally monitored home security systems with home automation systems. Compass Lexecon was retained by Jackie Grise of Cooley LLP on behalf of Alarm.com to assist with the FTC investigation of the transaction. The FTC cleared the transaction following a nine month in-depth investigation and after Honeywell, a competitor, sued to block the deal – leading Compass Lexecon Senior Managing Director Mark Israel to file a report in response – but then voluntarily dismissed its complaint pursuant to a settlement.
The FTC investigated several horizontal issues related to the merger, including an alleged increase in concentration in the dealer channel and the loss of potential competition from a new Icontrol product (Icontrol One). Working with Cooley, Compass Lexecon developed economic analysis to demonstrate that these issues raised no possibility of harm to competition. In particular, our analysis showed that Alarm.com faces intense and growing competition from several sources that will remain post-merger, including other firms operating in the dealer channel, cable and telco firms offering their own home security and automation solutions, and technology giants, such as Google, Apple, and Samsung, which are rapidly expanding into the home automation and security space. We also showed that Alarm.com’s ordinary course data along with its pricing trends suggested that potential competition from Icontrol’s new Icontrol One product was a non-issue.
The Compass Lexecon team was led by Mark Israel and Nauman Ilias, with support from Theresa Sullivan, Arti Bhargava and Wei Tan.