Naspers’s WeBuyCars deal may be blocked
A unit of the internet and media group, which owns OLX and the AutoTrader platform, wants to buy 60% of WeBuyCars
The Competition Commission says Naspers’s acquisition of local vehicle-purchasing service WeBuyCars should be blocked as it could lead to higher used-car prices in SA.
The commission has recommended to the Competition Tribunal that the deal be “prohibited”, it said on Wednesday.
A unit of Naspers, which owns the AutoTrader platform and OLX, wants to buy 60% of WeBuyCars. Naspers announced the deal in September 2018, saying it would invest R1.4bn in the company.
“We are very disappointed by the recommendation and respectfully disagree with the commission’s findings,” said Sjoerd Nikkelen, GM of OLX in Africa, the Middle East and Asia.
“As a long-term investor in SA, we believe that the transaction, which will bring a R1.4bn investment into the country, will help stimulate the economy and provide more consumers with innovative and convenient models to buy and sell used cars,” Nikkelen said.
In the automotive segment, Naspers already has investments in Dubai-based companies Expat Wheels and WeCashAnyCar and in multinational used-car marketplace Frontier Car Group.
While the WeBuyCars deal “does not present any competitor overlap in SA”, as the Naspers group is not involved in buying and selling cars, “it was found that the Naspers group, through Frontier Car Group, has been anticipating entering the SA market for the wholesale and online buying of used cars in competition with WeBuyCars”, the commission said.
“These entry plans were thwarted directly as a result of the merger.”
As such, the deal could remove potential new competition in the form of Frontier Car Group.
The commission said another concern is that Naspers owns and operates online automotive advertising platforms including AutoTrader, which WeBuyCars uses to sell and purchase vehicles.
“It is the view of the commission that the merged entity will have the ability to leverage its significant AutoTrader position as well as the OLX platform to exclude rivals of WeBuyCars.”
The deal could result in the foreclosure of other traditional dealers, the commission said.
“Overall, the proposed transaction is likely to substantially prevent or lessen competition in the relevant markets and result in used-car customers paying higher prices in future than they would otherwise pay in a competitive environment.”
Naspers’s shares were down 1.37% to R3,304 on Wednesday, even after associate company Tencent reported better-than-expected results.
Naspers CEO Bob van Dijk said in 2018: “One of the reasons we’re so excited about WeBuyCars is we’ve done a similar transaction in the Emirates, and based on the lead generation we saw that business actually quadruple in size in a year. There’s enormous synergy between people who are selling a car and the [classifieds] model.”