The Competition Tribunal has ruled that Naspers will not be allowed to purchase second-hand vehicle marketplace WeBuyCars.
The decision followed a recommendation in May 2019 from the Competition Commission that the proposed acquisition of WeBuyCars by MIH eCommerce Holdings, an entity of the Naspers Group, be prohibited.
Naspers first indicated in September 2018 that it wanted to purchase a 60% stake in WeBuyCars for R1.4 billion through its online advertising business OLX.
The Commission claimed that the acquisition would result in the removal of a potential competitor and substantially reduce competition in the car-buying market.
“The Commission had found that the proposed transaction was likely to substantially prevent or lessen competition in the market for car buying services and result in private sellers of used cars receiving lower prices from car buying companies in future than they would otherwise receive in a competitive environment,” it said.
The buying and selling of used cars to the public and wholesale of vehicles to used car dealers is a market segment currently dominated by WeBuyCars, the Commission said.
The Commission uncovered that Naspers, through an investment in Frontier Car Group Inc (FCG), had originally planned to enter the South African market for car-buying services in competition with WeBuyCars.
“These plans were stopped directly as a result of the proposed merger,” the Commission said.
The Commission argued that a supplier-customer relationship overlap existed because the Naspers Group owns online classified automotive advertising platforms such as OLX and Auto Trader, which WeBuyCars uses to sell and buy vehicles.
Additionally, the Commission found that this could lead to the exclusion of competing car-buying services.
“With respect to exclusion, the Commission found that there were numerous ways in which Naspers could harness the complementarities between WeBuyCars and AutoTrader and/or OLX to the exclusion of effective competition against WeBuyCars rivals as well as other online platforms,” it said.
The Tribunal has not yet issued the reasons for its decision.
OLX has responded to the Competition Tribunal’s ruling, stating that it was disappointed with the finding and respectfully disagreed with the decision.
“It has been a long and challenging journey since we made our initial intention to acquire WeBuyCars known in September 2018,” said OLX Africa general manager Sjoerd Nikkelen.
“We are extremely disappointed with the Competition Tribunal’s ruling and respectfully disagree with their findings.”
Nikkelen added that this investment would have made a significant contribution to the South African economy.
“We are a long-term investor with an established global and local business track record. The transaction would have resulted in a 1.8 billion-investment in South Africa, thus making a significant contribution to the economy,” Nikkelen said.
“Our ambition is to offer South Africans the easiest, safest and most transparent way to buy and sell cars.”
“The WeBuyCars team has built an impressive service that aligns well with OLX Group’s strategy,” Nikkelen said.