The competition watchdog has raised concerns over the £6.5bn takeover of Gumtree by Norwegian rival Adevinta, warning it could push up prices and reduce choice for consumers.
In July Adevinta struck a cash and stock deal with Ebay that would create the world’s largest online classified ads business.
The merger would bring together advertising platforms in 20 countries. In Britain, Adevinta controls Shpock, while Ebay owns popular classified ads site Gumtree.
The sale will see Ebay take a 33.3 per cent stake in Adevinta and position on the Nowegian firm’s board.
Following a phase one investigation, the Competitions and Markets Authority found the merger could lead to a loss of competition between Shpock, Gumtree and Ebay’s marketplace, with only Facebook Marketplace remaining as a significant rival.
It warned this could reduce consumer choice, increase fees or lower innovation in online marketplaces.
“It is important that people have 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 at the CMA.
“There is 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.”
The watchdog added that a review of internal documents showed that at the time of the deal with Adevinta there was a “realistic” chance Ebay would have sold Gumtree without retaining its influence, meaning Gumtree would have been an independent rival to Ebay’s marketplace.
In a statement today, Adevinta and Ebay said they did not agree with the CMA’s conclusion but were “confident in finding a reasonable solution”.
They added that Ebay’s UK classified ads business accounted for less than 10 per cent of its total revenue in 2019, while just one per cent of Adevinta’s revenue came from the UK.
The companies have until 23 February to offer solutions to the CMA’s competition concerns, after which the regulator has five days to consider whether an in-depth probe is needed.