Commission recommends Naspers purchase of WeBuyCars be prohibited

Picture: Thinkstock

Picture: Thinkstock

The Commission provided evidence that the deal could prevent or lessen competition in the market and result in used-car customers paying higher prices.

Less than a year after Naspers’s announcement that its e-commerce and classified unit OLX Group had made a R1.4 billion acquisition of specialised car buying service WeBuyCars, the Competition Commission has recommended to Competition Tribunal (Tribunal) that the deal be prohibited.

In a statement released on Wednesday, the Commission outlined all the factors they took into consideration.

“Although the Commission found that the proposed transaction does not present any competitor (horizontal) overlap in South Africa as the Naspers Group is not active in the buying and selling of cars, however, it was found that the Naspers Group through Frontier Car Group Inc (FCG) has been anticipating entering the South African market for the wholesale and online buying of used cars in competition with WeBuyCars,” stated the Commission.

“These entry plans were thwarted directly as a result of the merger. Given this potential entry, the Commission assessed if the proposed merger will result in the removal of potential competition in South Africa as Naspers Group had plans to enter the South Africa niche wholesale buying of used car market segment utilising the instant cash model and compete directly against WeBuyCars,” added the Commission.

The Commission considered whether the merger will result in the exclusion of the competitors of WeBuyCars and or AutoTrader, given the vertical (supplier-customer relationship) overlap, because Naspers Group owns and operates online classified automotive advertising platforms, eg, OLX and Auto Trader, and WeBuyCars utilises these platforms to either sell or purchase vehicles.

“With respect to the removal of potential competition concern, the Commission is of view that the proposed transaction will result in the removal of Naspers Group (FCG) as a potential effective competitor to WeBuyCars in the niche segment of wholesale and online buying of used cars using an instant cash model from the public and the consequent selling to dealers and others. This is the market segment that is currently dominated by WeBuyCars, which owns a significant share of this market,” said the Commission.

The entity went on to state that with respect to exclusion, the Commission found that there are numerous ways in which Naspers can harness the complementarities between WeBuyCars and AutoTrader and/or OLX to the exclusion of effective competition against WeBuyCars rivals as well as other online platforms.

“Overall, the proposed transaction is 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,” concluded the statement.

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