So far, CCC and Mitchell officials have been fairly mum on details of the proposed merger other than to say the intent is to transition to a single platform. Naturally, there has been discussion among repairers about its possible implications. A few industry folks recently offered their thoughts exclusively to BodyShop Business:
“It will be very bad for the industry. The insurance companies already have a stranglehold on our industry, and having CCC and Mitchell merge will make it much easier for the insurers to keep us under their thumbs. This screams of what the McKinsey Report suggested to do.”
“Way back in the olden days, there were only two databases, Motor and Mitchell. In my early years in the industry, I worked for an insurance company, and we used whichever book the shops didn't and frequently paid the lowest time from the two books.
“The real issue is not the database. There will still be three databases, at least for as long as Mitchell allows CCC to honor its commitment to Motor. The real issue is, and always has been, to get the insurers to deal with shops honestly and professionally, using not just select parts of one database or another but the entire database, 'Not Included' items and all.
“So I don't see the merger as a real ‘threat’ to the industry. It might actually make things easier. The real focus should be convincing the insurance side to use one system or the other, and use the whole system as designed to arrive at fair and accurate damage evaluations.”
“I've tried to tell shop owners for years that every time you give away a free procedure in the interest of getting along with insurers, you help them set a precedent. DRP shops have given insurers tons of so-called ‘proof’ that some procedures in the 'Not Included' column belong in the 'Included' column. ‘Look at all these shops that don’t charge for those P-page items,' blah blah blah. If the data providers turn into one (or one-and-a-half) giant entity, they’ll no doubt form an alliance with the insurers. It won't take place in public. The alliance will happen on a golf course. It will be much easier to manipulate one entity than three, right?”
“I believe that there is already a lack of competition in the collision repair data provider marketplace and that a merger between CCC and Mitchell would create such an enormous market share for a single entity that it would crush all meaningful competition and would be a complete barrier to entry for any other company interested in joining the market. I think the Department of Justice (DOJ) should prohibit such a merger under the antitrust provisions of the Clayton Act.
“I think it's also important to understand that there is already a significant lack of meaningful information collected by these same data sources. As they only include information on those shops that submit information electronically (i.e. DRP shops), the data they sell/provide on repairer prices, rates and practices is limited exclusively to those submitting electronically and is an extremely tainted data set already being (or at least attempted to be) applied to the collision repair universe at large.
“I think repairers should raise an outcry to prevent the DOJ from approving the merger.”
“I see it as a monopoly. It should be illegal but it probably is not. Talk about mining your data! They’ll have it all. As long as Audatex or Solera survives, there may be some hope, but now times and procedures will just get more time cut from the operations to suit the largest customer (the insurers). There will be no books to go back to and check times to see if they've been cut. This will probably be the nail in the coffin for a lot of shops as the merger progresses.”
“I think it’s too soon to tell. I suspect it could make things worse, although I feel if you're on your game as an estimator, it shouldn't be a problem. Half of the shops don't know how to use the P-pages anyway. So I could see abolishing the estimating guidelines for 'Not Included' items. I have learned that estimating is the core of our profit center, so we need to maintain control of the estimating process. Our industry as a whole spends between $1.05 to $1.26 to produce $1.00 of labor and it’s getting worse. So I see the problem lying with the estimators and the shops, not with the database.
“Since June 1991, industry leadership has toiled to enable shops to not require having three estimating systems. We created CEIDIS and CEICA and talked about it at CIC for 17 years. It now seems that perhaps we’ll realize the dream by attrition and consolidation, which is about the only upside from this. Perhaps shops will finally be able to cut their costs by 33 percent by not having to buy both Mitchell and CCC!
“Seriously, the concern is that it could eliminate competition and therefore raise prices and stifle competition. We haven’t seen innovation in the estimating systems for nearly 17 years because [the database providers] don’t have to innovate. When I approached these companies about creating a consumer-friendly estimate, I was nearly laughed at. With less competition, there will be less innovation, not to mention less motivation to innovate, respond to the market and keep prices competitive. We cannot be sure that any ill will befalls us, but we know the track record in the past and can predict the future accordingly. This does have the potential to be harmful to the industry, but it’s not likely. Even if it does result in all of the worst-case scenarios, it's not as big an expense as the price fixing the paint companies get away with each year.”
“The collision industry complains that it's a pawn in an equation largely driven by stronger forces – insurance, information providers, etc. If you go on the Web sites of these information providers, it’s clear that their products are driven by claims handling processes, with the repair shop's need to write an accurate repair estimate for a motorist hardly even mentioned.
“So we now have an event that can have a dramatic impact on our businesses, and there’s hardly any mention, at the association level at least, of studying the issue, forming a position and possibly proactively taking steps to protect our interests. Are the CIC-style relationships that we’ve developed and become dependent on a hindrance to us thinking and acting clearly?"