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 eBay’s share to Adevinta, a leading web advertising agency.
Adevinta ADE,
is a Norwegian e-commerce company that operates the Shpock-rated platform, a direct competitor to eBay-owned EBAY-owned Gumtree,
Classified Group. Both platforms are popular in the UK and allow consumers to buy and sell a range of new and used products, such as furniture and electronics.
The $ 9.2 billion acquisition proposed for the eBay division by the Norwegian company, agreed in July 2020, would make Adevinta the largest online sorting business in the world.
The CMA said the acquisition would see eBay receive $ 2.5 billion in cash and 540 million shares of Adevinta, comprising a 44% ownership share of the expanded company and one-third of its voting rights.
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This would allow eBay to participate in the regulation of both businesses 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 eBay, leaving only Facebook Marketplace a major competitor.” In turn, this could reduce consumer choice, lead to higher taxes, and hurt innovation, the regulator said.
“Without this contract there is a reasonable chance that Gumtree and Shpock would have been direct competitors to eBay, and it is the largest player in this market,” said Joel Bamford, CMA’s senior union leader.
“This is the latest in a series of union reviews with the CMA involving major digital companies, where we are closely scrutinizing contracts to ensure competition is not restricted, and consumer interests. protected, ”said Bamford.
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In November, the UK government announced the establishment of a Digital Markets Unit within the CMA to oversee pro-competitive reforms in the tech sector. The new unit will become operational in April 2021.
The CMA said Adevinta and eBay have until Feb. 23 to offer legally binding solutions to address the regulator’s competition concerns. The CMA can then accept the offer or submit the agreement for in-depth scrutiny.
“Adevinta and eBay will jointly propose legally binding solutions to resolve the CMA’s competition concerns by 23 February 2021,” the Norwegian company said in a statement. “Adevinta and eBay are still excited about the proposed transaction and look forward to closure. A nearly identical statement has been released by eBay.