The South African Competition Commission recently decided that Naspers proposed purchase of WeBuyCars should be denied because it could prevent other businesses from entering into the market and possibly create a monopoly.
The proposed deal would see MIH eCommerce Holdings, an entity within the Naspers group, acquiring 60% of WeBuyCars.
MIH eCommerce is mainly an investment holding company and does not itself supply any products or services in South Africa. It has investments in OLX and the Naspers’ subsidiary, Car Trader, which operates as AutoTrader.
Although the commission found that the proposed transaction does not present any competitor (horizontal) overlap in South Africa – as Naspers is not active in the buying and selling of cars – it was found that the Naspers Group, through Frontier Car Group, has been anticipating entering the South African market for the wholesale and online buying of used cars in competition with WeBuyCars.
“These entry plans were thwarted directly as a result of the merger,” the commission said.
“Given this potential entry, the commission assessed if the proposed merger will result in the removal of potential competition in South Africa, as Naspers Group had plans to enter the South Africa niche wholesale buying of used car market segment utilizing the instant cash model and compete directly against WeBuyCars.”
The commission also said that there is a vertical (supplier-customer relationship) overlap because the Naspers Group owns and operates online classified automotive advertising platforms, OLX and Auto Trader, and WeBuyCars utilizes these platforms to either sell or purchase vehicles.
Read more here