JOHANNESBURG - South Africa's Competition Commission on Thursday recommended that the Competition Tribunal block the proposed acquisition of WeBuyCars by MIH eCommerce Holdings, an entity of Naspers.
Investment holding company MIH eCommerce wants to acquire 60 percent of WeBuyCars. It already has investments in OLX and Naspers’ subsidiary, Car Trader, which operates as AutoTrader, but the investment holdings firm does not itself supply any products or services in South Africa.
The Competition Commission said while it found that the proposed transaction did not present any competitor overlap as Naspers was not active in the buying and selling of cars, Naspers, through Frontier Car Group Inc, had been anticipating entering the South African market for the wholesale and online buying of used cars in competition with WeBuyCars.
These entry plans were thus thwarted directly as a result of the merger.
The Commission said given this potential entry, it had assessed if the proposed merger would result in the removal of potential competition.
The proposed merger would likely result in a substantial lessening of competition through exclusion, it said.
WeBuyCars is a dominant wholesale and online buyer of used cars from the public, while AutoTrader is the largest online classified platform and generates significant customer traffic, making it a key online platform for traditional used car dealers seeking to sell their car stock.
The Commission said its view was that the merged entity would have the ability to leverage its significant AutoTrader position as well as the OLX platform to exclude rivals of WeBuyCars.
It said it was concerned that the proposed merger would result in the foreclosure of other traditional dealers, that is, rivals of WeBuyCars on the sell side.
This was because AutoTrader was a significant platform on which many traditional dealers advertised their cars and had the ability and incentive to offer preferential treatment towards WeBuyCars.
Overall, the Commission said the proposed transaction was likely to substantially prevent or lessen competition in the relevant markets and result in used car customers paying higher prices in future than they would otherwise pay in a competitive environment.
African News Agency (ANA)