Ebay’s £6.5bn Gumtree sale to rival ‘risks higher prices and less choice’

Business

A planned £6.5bn sale of eBay’s classified ads business Gumtree to a Norwegian rival threatens “higher prices and less choice” for consumers, a watchdog has warned.

The acquisition by Adevinta, which owns the online marketplace Shpock, would give the US multinational a 33.3% voting stake and a seat on the board of its Scandinavian competitor.

The deal, announced last July, would create the world’s largest classifieds group if it were to go ahead.

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The CMA raised concerns over eBay’s position on the Adevinta board

But following an initial investigation, the Competition and Markets Authority (CMA) has raised concerns that the move “could lead to a loss of competition between Shpock, Gumtree and eBay‘s marketplace, with only Facebook Marketplace remaining as a significant competitor”.

It added: “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 CMA said eBay’s position on the Adevinta board means it will be able to participate in the management of the firm and could enable it to influence the business strategy for both Gumtree and Shpock.

It also believed that, having reviewed internal documents, that there “would have been a realistic chance eBay would have sold Gumtree to a different purchaser without retaining its influence”.

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“This would have resulted in Gumtree becoming an independent competitor to eBay’s marketplace,” it said.

The regulator told the companies they now have a week to offer legally-binding solutions to deal with its competition concerns.

The CMA will then consider whether to accept their proposals, or to refer the deal to an in-depth investigation.

Joel Bamford, senior director of mergers at the CMA, said: “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.

“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.”

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