Multinational marketplace eBay will sell UK-based “primary classified operations” Gumtree UK and Motors.co.uk to advance its $9.2bn (£6.5bn) merger with Norwegian classifieds ads company Adevinta. Adevinta has also offered to divest from its second-hand selling site Shpock.
This comes a month after the UK Competition and Markets Authority (CMA) declared that the merger – which would see Adevinta acquiring 100% of eBay’s classifieds group – would “result in a substantial lessening of competition within a market or markets in the United Kingdom.”
The CMA said it would “reduce consumer choice [and] increase fees or lower innovation in the supply of platforms that allow people to buy and sell goods online.”
To be able to proceed with the merger, eBay will be offloading the UK businesses of its classifieds group, which eBay and Adevinta claim represent less than 5% of its combined consolidated revenues.
In an update released today, the CMA said: “The CMA considers that there are reasonable grounds for believing that the undertakings offered by Adevinta and eBay, or a modified version of them, might be accepted by the CMA under the Enterprise Act 2002.”
The merger was announced in July 2020 and has been under inquiry by the CMA since December 2020. The CMA is expected to make a final decision regarding whether to green-light the merger by the end of April 2021, however, the decision may potentially be postponed to the end of June.
Last year, Germany approved of the merger on the basis that Shpock had low sales and market share.
Response from eBay and Adevinta
In response to the CMA’s decision to halt the merger in February, eBay issued a statement that announced it would be seeking “potential remedies to avoid the transaction being referred to further investigation”.
eBay said: “While eBay and Adevinta do not agree with the CMA’s reasoning, they will work constructively with the CMA and are confident in finding a suitable resolution.
“eBay and Adevinta will together propose legally binding solutions to resolve the CMA’s competition concerns before the deadline of February 23, 2021. The CMA will then have five working days to consider whether to accept the solutions or to refer the deal to an in-depth investigation. A further update will be provided in early March following this decision.”
Today, Adevinta released a statement where the company said: “In 2019, eBay Classifieds Group’s UK business accounted for less than 10% of its consolidated revenues and Adevinta’s UK business accounted for only 1% of its consolidated revenues. On a combined basis, the UK would represent less than 5% of total consolidated revenues.
“Adevinta and eBay remain excited about the proposed combination of Adevinta and eBay Classified Group and now target closing the transaction in Q2 2021, subject to final
ratification of the remedies execution plan by the CMA and receipt of outstanding regulatory approval in Austria.”