Tribunal prohibits Naspers’s OLX, WeBuyCars merger
The Competition Tribunal has today issued an order prohibiting the proposed transaction involving MIH eCommerce Holdings, trading as OLX South Africa, and WeBuyCars (WBC).
In a statement, the tribunal says MIH is ultimately controlled by Naspers. In terms of the proposed transaction, Naspers through MIH sought to acquire control of WBC.
WBC is a dealer in used vehicles in SA. It purchases used vehicles mainly from private sellers and then on-sells those vehicles to used car dealers and to private consumers.
The tribunal’s prohibition follows “large” merger proceedings during which the tribunal heard evidence from factual witnesses and expert economists of the Competition Commission and the merging parties, as well as arguments.
The reasons for the tribunal’s prohibition will be made available in due course.
The tribunal says OLX is an operating division of MIH and is active as a generalist (or horizontal) classified advertising platform.
It carries advertisements for a broad range of goods and services, including various kinds of vehicles, electronics and computers, fashion and beauty, sports and outdoors and pets.
Naspers also owns and operates OLX advertising platforms in various other countries.
Other firms in the Naspers group that are relevant for purposes of the proposed transaction are The Car Trader, trading as AutoTrader, and Media24.
AutoTrader is a specialised (or vertical) online advertising portal, specialising in the advertising of motor vehicles. Media24 is the South African print media division of Naspers, with interests in various magazines, newspapers and digital platforms in South Africa.
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 (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’s 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, says the tribunal.
Weelee, 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.