South Africa’s competition watchdog has blocked Naspers deal to acquire WeBuyCars, a dealer in used vehicles in South Africa.
The Competition Tribunal announced its decision on Friday issued an order prohibiting the proposed transaction involving MIH eCommerce Holdings (MIH), trading as OLX South Africa (OLX), and WeBuyCars.
MIH is ultimately controlled by Naspers, a JSE-listed group.
The reasons for the Tribunal’s prohibition will be made available in due course.
The Commission – which investigates and assesses large mergers before referring them to the Tribunal for a decision – recommended that the proposed transaction should be prohibited as 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 Inc (FCG), an online used car buying and selling platform in which the Naspers Group had recently acquired shares, would have entered the South African market in close competition with WBC and would have appreciably enhanced the level of competition faced by WBC in South Africa. 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 by the Naspers group of WBC will entrench WBC’s market position and raise barriers to other players as a result of various benefits obtained through Naspers’ activities related to OLX, AutoTrader, Media24 and the Naspers group in general. The Commission referred to this as the portfolio effects of the proposed transaction.
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 ultimate conclusions. They argued that the proposed transaction should be approved subject to certain conditions as tendered by them.
Weelee, a rival of WeBuycars and a recognised participant in the merger proceedings, supported the commission’s recommendation that the proposed 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.