In the latest move by regulators to protect competition in online markets, the UK Competition and Markets Authority, or CMA, has opposed the sale of a division of eBay to Adevinta, a dominant group of classifieds on the web.
Adevinta ADE,
is a Norwegian e-commerce company that operates the Shpock classifieds platform, a direct competitor of Gumtree, which is owned by eBay’s eBay,
Group of classifieds. Both platforms are popular in the UK and allow users to buy and sell a range of new and used products, such as furniture and electronics.
The planned $ 9.2 billion acquisition of the eBay division by the Norwegian company, agreed in July 2020, would make Adevinta the largest online classifieds company in the world.
The CMA said the acquisition would allow eBay to receive $ 2.5 billion in cash and 540 million shares of Adevinta, totaling a 44% stake in the enlarged company and one-third of its voting rights.
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This would allow eBay to participate in the management of the two companies and the influence strategy of Shpock and Gumtree, the regulator said.
The CMA said it was concerned that the merger “could lead to a loss of competition between Shpock, Gumtree and the eBay marketplace, with only Facebook Marketplace remaining a significant competitor.” In turn, this could reduce consumer choice, lead to higher fees and hurt innovation, the regulator said.
“There is a realistic chance that without this deal, Gumtree and Shpock would have been direct competitors of eBay, which is by far the biggest player in this market,” said Joel Bamford, senior mergers director at CMA.
“This is the latest in a series of CMA merger investigations involving large digital companies, where we are scrutinizing the deals to ensure that competition is not restricted and the interests of consumers are protected, ”Bamford said.
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In November, the UK government announced it would set up a digital markets unit within the CMA to oversee pro-competition reforms in the tech sector. The new unit will enter service in April 2021.
The CMA said Adevinta and eBay have until February 23 to come up with legally binding solutions to resolve the regulator’s competition concerns. The CMA can then accept the offer or refer the matter to a full investigation.
“Adevinta and eBay will jointly come up with legally binding solutions to resolve CMA’s competition concerns before the February 23, 2021 deadline,” the Norwegian company said. in a report. “Adevinta and eBay remain excited about the proposed transaction and look forward to closing.” An almost identical statement was published by eBay.
