A Deal Could Lead to a Loss of Competition
Adevinta and ecommerce company eBay agreed on a $9.2 billion deal in July of last year to create the world’s largest classifieds business. However, it seems that the CMA has competition concerns over a proposed business deal.
“The CMA is concerned the merger could lead to a loss of competition between Shpock, Gumtree and eBay’s marketplace, with only Facebook Marketplace remaining as a significant competitor,” the CMA said in a statement.
“This could reduce consumer choice, increase fees or lower innovation in the supply of platforms that allow people to buy and sell goods online.”
The Norway-based company issued a follow-up statement to confirm that British regulators have concerns as the deal could reduce competition in the UK. The ecommerce company owns British sites Gumtree and ebay.co.uk, while Adevinta owns Shpock.
“Adevinta and eBay now have the opportunity to propose potential remedies to avoid the transaction being referred to further investigation. While Adevinta and eBay do not agree with the CMA’s reasoning, they will work constructively with the CMA and are confident in finding a suitable resolution,” Adevinta said in its company statement.
Moreover, the digital company says it will work together with eBay to propose “legally binding solutions” that will resolve the CMA’s competition concerns before the deadline of 23 February 2021.
Following this deadline, the regulator will have five working days to consider these solutions and decide whether to accept them or launch an in-depth investigation into the deal.
The digital company adds in a statement that eBay Classifieds Group’s UK business accounted for less than 10% of its consolidated revenues in 2019, while Adevinta’s UK business accounted for just 1% of its consolidated revenues.
Shares of Adevinta plunged about 3.5% in Oslo today following CMA remarks, while the eBay stock price is up 0.8% on pre-market Tuesday.
The proposed deal to merge Adevinta and eBay’s classified ads business operations hit a stumbling block on Tuesday after the British competition regulator said it is concerned that the business deal could lead to a loss of competition in the UK.