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16 Feb 2021 | 08:35

eBay's Gumtree sale raises competition concerns says UK regulator

(Sharecast News) - Ebay's planned $9.2bn (£6.5bn) deal to sell its Gumtree unit to Shpock owner Adevinta could reduce consumer choice and raise prices in the online classified advertising sector, the UK's competition watchdog warned on Tuesday.

The deal would create the world's biggest classified ads business, combining websites that allow people to buy and sell used or new items from clothes to cars.

However the Competition and Markets Authority (CMA) said it was concerned the merger could lead to a loss of competition between Shpock, Gumtree and eBay's marketplace, with only Facebook Marketplace remaining as a major competitor.

"This could reduce consumer choice, increase fees or lower innovation in the supply of platforms that allow people to buy and sell goods online," it said.

Under the deal with Adevinta, eBay would acquire a 33.3% voting stake in the Norwegian company and positions on its board, meaning it could influence the business strategy for Gumtree and Shpock, the CMA said.

The deal, agreed in July, would make Adevinta, spun off from Norwegian publishing group Schibsted in 2019, the world's largest classified ads business with annual revenues of $1.8bn.

By offering eBay a big stake, Adevinta beat rival bidders including Naspers and Prosus, even though they offered eBay more cash as part of their bids.

"Having reviewed eBay's internal documents at the time the decision was made to sell ... to Adevinta, CMA considers there would have been a realistic chance eBay would have sold Gumtree to a different purchaser without retaining its influence," the regulator said in a statement.

"This would have resulted in Gumtree becoming an independent competitor to eBay's marketplace."

Adevinta and eBay have until 23 February to offer legally binding solutions to resolve the CMA's competition concerns. The regulator then has five working days to consider whether to accept the offer instead of referring the deal to an in-depth investigation.

In a statement Adevinta said that while it and eBay disagreed with the CMA, they would "work constructively" and were confident in finding a suitable resolution.
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