In the latest move by regulators to protect competition in online marketplaces, the UK Competition and Markets Authority, or CMA, has opposed the sale of an eBay division to Adevinta, a dominant classified ad group. in the web. Adevinta ADE, -0.07% is a Norwegian e-commerce company that operates the Shpock classifieds platform, a direct competitor of Gumtree, which is owned by EBAY, -0.23% eBay Classifieds Group. Both platforms are popular in the UK and allow users to buy and sell a variety of new and used goods, such as furniture and electronics.
The Norwegian company’s proposed $ 9.2 billion acquisition of the eBay division, agreed in July 2020, would make Adevinta the world’s largest online classifieds company. The CMA said the acquisition would see eBay receive $ 2.5 billion in cash and 540 million shares of Adevinta, totaling a 44% ownership stake in the enlarged company and a third of its voting rights. Essential reading: Facebook, Google, Apple and Amazon could face billions of dollars in fines under new EU tech regulations. This would allow eBay to participate in business management and influence strategy for both 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 choices, lead to higher fees and hurt innovation, the regulator said. “There is a realistic possibility that without this agreement Gumtree and Shpock would have been direct competitors of eBay, which is by far the largest player in this market,” said Joel Bamford, CMA’s senior director of mergers. “This is the latest in a series of merger investigations conducted by the CMA involving large digital companies, where we are thoroughly examining the deals to ensure competition is unrestricted and consumer interests are protected,” said Bamford. . Also read: Google‘s new ad tech under investigation over competition concerns from the UK regulator In November, the UK government announced that it would establish a Digital Markets Unit within the CMA to oversee pro-competition reforms in the technology sector. The new unit will begin operations in April 2021. The CMA said Adevinta and eBay have until February 23 to offer legally binding solutions to resolve the regulator’s competition concerns. The CMA can then accept the offer or refer the deal for an in-depth investigation. “Adevinta and eBay will together propose legally binding solutions to resolve the CMA’s competition concerns before the February 23, 2021 deadline,” the Norwegian company said in a statement. “Adevinta and eBay remain excited about the proposed transaction and look forward to closing it.” EBay released a nearly identical statement.