eBay’s £6.5bn deal to sell Gumtree raises ‘competition concerns’ says watchdog

By Becky Bargh 17-Feb-2021

Shpock owner’s purchase of the advertiser site would quash any competition for the beauty seller’s platform, according to Britain’s Competition and Markets Authority

eBay’s plans to sell online adverts site Gumtree to Shpock owner Adevinta has hit a stumbling block after Britain’s Competition and Markets Authority (CMA) warned the £6.5bn deal could reduce consumer choice and increase fees for advertisers.

Following the Phase 1 investigation of the merger that would have combined Shpock and Gumtree’s websites, the CMA expressed concerns the move could lead to significant loss of competition between Shpock, Gumtree and eBay’s marketplace, ebay.co.uk.

The beauty seller’s deal with Adevinta, agreed in July, would give eBay, the UK’s largest platform for selling goods, a 33.3% voting stake in Adevinta, as well as positions on its Board.

This influence over Gumtree and Shpock’s business strategy is something the CMA, led by Andrea Coscelli, believes eBay would not have had if it had chosen to sell to a different buyer, which would have made Gumtree a direct competitor to eBay’s platform.

Adevinta’s generous offering put it ahead of rival businesses Naspers and Prosus, despite offering eBay more cash for the bid, according to The Guardian.

However, the decision by the CMA does not mean the deal will fold. Adevinta and eBay have until 23 February to offer a solution for the group’s concerns.

“It is important that people have a 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,” said Joel Bamford, Senior Director of Mergers for the CMA.

“There’s 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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Gumtree offers adverts for health and beauty professionals, including massages, hairdressers and barber services.