The Competition and Markets Authority (CMA) has raised concerns over the proposed sale of the eBay Classifieds Group (eCG) to Shpock owner Adevinta for around $9.2bn.
The deal, announced in July last year, would see Adevinta pick up 100 per cent of eBay’s classifieds arm, which houses Shpock rival Gumtree. Despite Adevinta gaining ownership of the entire eCG business, the agreement would also mean that eBay acquires a 33.3 per cent voting stake in Adevinta and positions on the Norwegian company’s board.
The fact that eBay would have significant influence over both Gumtree and Shpock is what concerns the CMA, a fear heightened by evidence that eBay may have been close to selling Gumtree to another business without retaining influence over the platform.
The CMA believes that there could be a loss of competition between Shpock, Gumtree, and eBay, leaving Facebook Marketplace as the only other significant competitor, thus reducing consumer choice, and possibly increasing fees and lowering innovation.
“It is important that people have choice when it comes to selling items they no longer require or searching for a bargain online, and that they can enjoy competitive fees and services,” said Joel Bamford, Senior Director of Mergers at the CMA.
“There is a realistic chance that without this deal Gumtree and Shpock would have been direct competitors to eBay, which is by far the biggest player in this market. This is the latest in a series of merger probes by the CMA involving large digital companies, where we are thoroughly examining deals to ensure that competition is not restricted, and consumers’ interests are protected.”
Both eBay and Adevinta have acknowledged the CMA’s announcement and, while not agreeing, have pledged to work with the UK government department to find a ‘suitable resolution’.