Tribunal torpedoes Naspers’s R1.4-billion WeBuyCars acquisition

The Competition Tribunal has blocked Naspers’s plan to buy WeBuyCars. This comes after the Competition Commission moved to prevent the R1.4-billion acquisition of a 60% stake in the company.

Naspers said in September 2018 that its subsidiary OLX Group was making the investment in the specialised car-buying service founded 18 years ago by Faan and Dirk van der Walt.

On Friday, the Competition Tribunal issued an order prohibiting the proposed transaction involving MIH eCommerce Holdings (trading as OLX South Africa) and WeBuyCars. MIH is ultimately controlled by Naspers. In terms of the proposed transaction, Naspers, through MIH, sought to acquire control of WeBuyCars.

The reasons for the tribunal’s prohibition of the deal will be made available in due course, the regulator said in a statement.

The commission, which investigates and assesses large mergers before referring them to the tribunal for a decision, recommended that the proposed transaction be prohibited as, it said, it is “likely to substantially prevent or lessen competition”.

It argued that the proposed transaction should be prohibited on two grounds:

• It contended that, absent the proposed transaction, Frontier Car Group (FCG), an online used car buying and selling platform in which Naspers had recently acquired shares, would have entered the South African market in close competition with WeBuyCars and would have appreciably enhanced the level of competition faced by WeBuyCars. “In short, the proposed transaction harms competition in South Africa by eliminating the potential entry of FCG, a Naspers entity.”
• It also contended that the acquisition of WeBuyCars would entrench the company’s market position and raise barriers to other players as a result of various benefits obtained through Naspers’s activities related to OLX, AutoTrader, Media24 and the group in general. The commission referred to this as the “portfolio effects of the proposed transaction”.

Opposed

The commission further argued that the conditions proposed by the merging parties would not remedy the competition concerns.

The merging parties opposed the commission’s recommendation and disputed its theories of harm to competition and its ultimate conclusions. They argued that the proposed transaction should be approved subject to certain conditions they had tabled.

WeBuyCars rival Weelee supported the commission’s recommendation that the transaction should be prohibited. Weelee started trading in 2017 and acts as an intermediary between private sellers and car dealers by providing a platform on which vehicles are auctioned. – © 2020 NewsCentral Media